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A press conference was held on Thursday about the new regulations on foreign-funded banks, which were approved at the 155th executive meeting of the State Council last Wednesday. Foreign banks encouraged to set up Chinese subsidiaries The Chinese government is encouraging foreign banks to incorporate locally and set up subsidiaries to minimize risks for Chinese customers, a senior official said on Thursday. China-registered subsidiaries will be corporate entities, said Song Dahan, deputy director of the Legislative Affairs Office of the State Council at a press conference. If a foreign bank continued to run its Chinese operation as branches operated from overseas, the range of services it could offer customers would be limited, he said. Song said linking the range of services a foreign bank can offer to its corporate status would help safeguard the interests of Chinese customers. According to international practice, when liquidity risks occur, domestic customers are given priority in withdrawing funds. Chinese individuals who deposit money in branches operated from overseas could find their assets at risk if the parent bank experienced a crisis. In a globalized world, financial risks can be passed from one country to another. But China-registered corporate entities, which are supervised by Chinese banking authorities, will take measures to minimize risk and ensure domestic financial stability, he said. Song said the policy favoring Chinese corporate status complied with WTO rules, which allow its members to adopt measures of prudence when opening up the banking sector. Prudent measures include policies that protect customers' interests, prevent risks to the bank and safeguard the stability of financial markets. As of December 11, "The Chinese government will do everything it can to facilitate the conversion process, which will take one to three months," said Wang Zhaoxing, assistant chairman of the Chinese Banking Regulatory Commission at the press conference. Wang said he is confident the government departments involved -- the judicial department, the industrial and commercial administration, and the banking regulatory commission -- will work together in an efficient and well-coordinated manner. The length of the conversion period also depended on the preparation work carried out by the foreign-funded banks, he said. Wang said locally incorporated bank will not be regarded as new institutions. The date on which the foreign bank established its first branch in He gave the example of a foreign bank that has been operating in Total asset of foreign-funded Banks in The total assets of foreign-funded banks in In both Chinese and foreign currencies, the assets of foreign-funded banks in The CBRC released the figures in the run-up to the full opening of CBRC figures show by the end of September, 14 foreign-funded or joint-venture banks were registered in The CBRC said 73 banks from 22 countries and regions had set up 191 branches and 61 sub-branches in 24 cities, and 183 banks from 41 countries and regions had set up 242 agencies in 24 cities. By the end of September, 25 Chinese cities had opened Renminbi service to foreign-funded banks, and 111 foreign-funded banking institutions had been allowed to engage in Renminbi services. Foreign-funded banks' Renminbi services had been growing at an average annual rate of 92 percent since the end of 2001 when Since 2001, So as to cope increasing challenges from foreign competitors, the country has been boosting forcefully the reform on its state-owned banks that were harassed by high non-performing loan ratios. Now three of its four largest state-owned commercial banks have been listed on the stock market after overhauling reforms. Foreign financial institutions encouraged to join Foreign financial institutions with good credit are encouraged to join There are 25 foreign financial institutions taking shares in 20 large, medium and small sized commercial banks in "The opening of Wang said The rules stipulate that an individual foreign financial institution can hold no more than 20 percent of shares in Chinese financial institutions and the ceiling for all foreign financial institutions is 25 percent. Tax preferential treatment to foreign-funded banks After the full openness of Song Dahan, deputy director of the Legislative Affairs Office of China's State Council, made the remark Thursday when responding a question from the press. "Those foreign-funded banks that have been locally incorporated and registered in The Chinese government is thinking about the reform on current income tax system that differentiates Chinese and foreign-funded companies, he said. At the same press conference, Wang Zhaoxing, assistant chairman of the China Banking Regulatory Commission, suggested that after foreign-funded banks fully receive national treatment in "Only in this way can the principle of fair competition be realized," Wang said. Foreign banks to issue credit card in RMB Foreign banks can issue credit cards in RMB after they become locally incorporated banks, said Wang Zhaoxing, assistant chairman of the China Banking Regulatory Commission (CBRC). Wang Zhaoxing said at the press conference held on Thursday that the foreign banks are required to have good risk management, risk control system and IT support system to hedge risks in the issuance of credit cards in Wang said the People's Bank of China, the central bank, will be responsible for the operation and management of the payment system. Further details on the issuance of credit cards by foreign banks in (Xinhua News Agency November 16, 2006)
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