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| April Start Date for RMB Accounts at Overseas Banks |
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Chinese citizens on the mainland may soon be able to open RMB accounts at subsidiaries of four overseas banks, namely the Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, Standard Chartered Bank and the Bank of East Asia from April onwards. An official with the China Banking Regulatory Commission (CBRC) revealed that an initial inspection had been completed as relating to the banks’ plans for creating locally registered subsidiaries. However, before their business can officially begin, the financial institutions still need to file applications with the CBRC and apply for their business licenses according to State Administration for Industry and Commerce procedures. Assuming that no delays occur, the banks would receive permission to start a full-range of RMB services in early April. Analysts have outlined that although foreign banks will benefit from a bracket within which to allow their own interest rates to fluctuate, this would not translate into preferential treatment meaning they would be expected to abide by Chinese regulations. They could also find themselves subjected to more intense scrutiny before being allowed to grant loans. Without an established national presence, overseas banks would likely not directly threaten the market penetration of domestic rivals for the next two years, stated Guo Tianyong, an economist from Central University of Finance and Economics. Guo further estimated that the banks would need five to eight years to effectively set up their Chinese business, basing his assumption on models from other countries. On Dec. 24 last year, the CBRC first gave the go-ahead to nine overseas banks to prepare for the establishment of China-registered subsidiaries. The CBRC is still carrying initial preparation checks on the other five banks. Chinese law dictates an overseas bank wishing to offer all facets of RMB business in China must create a locally registered subsidiary bank with corporate status, without which it will be limited to take term deposits of no less than one million yuan. (Xinhua News Agency March 13, 2007) |
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