Compared with domestic rivals, the biggest obstacle for foreign banks is the scarcity of outlets. To close the gap, the British Standard Chartered Bank has decided to open two additional sub-branches before the end of 2006 and double the number of existing outlets within the next 18 months.

With one of the largest foreign bank networks in China with 20 outlets in 14 cities, Standard Chartered intended to expand the number of staff in China to more than 2,000 before 2008 from the current number of about 800.

It also signed a framework agreement last week with Shanghai's metro operator and is about to install its ATM machines inside metro stations. Last month Standard Chartered announced the installation of their first ATM machine in Shanghai and their plan to set up at least 20 self-service facilities in key Chinese cities in the next few months.

In view of the fierce competition in the eastern regions, overseas players are advancing westward to explore the relatively less developed areas.

HSBC, Europe's biggest lender, opened a new branch in Xi'an, capital of Northwest China's Shaanxi Province, on Friday, becoming the first foreign bank to expand its presence to western China following the full opening of China's financial sector on December 11.

"As an economic centre of western China, Xi'an has achieved impressive growth in recent years and offers great potential for HSBC," Richard Yorke, HSBC chief executive officer China, said.

Vincent Cheng, HSBC chairman, said: "as long as there are customers, we will go there."

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