The Bank of China's Jiaxing branch has focused its attention on expanding its base of high-quality clients to fuel its business development.

During the first half of this year, 17 new companies with a registered capital of more than US$5 million each have become clients of the bank, said Bao Guanxin, president of the bank branch.

As a result, the bank's business continued to develop rapidly and healthily, he said.

The bank's outstanding amount of renminbi deposits rose a year-on-year 29.7 per cent to 9.1 billion yuan (US$1.1 billion) during the January-June period.

The amount of foreign exchange deposits rose US$12.7 million compared with the beginning of this year.

During that period, the bank issued new renminbi and foreign exchange loans which totalled 2.23 billion yuan (US$268.6 million).

By the end of June, the bank's non-performing loans dropped 1.67 percentage points from the beginning of the year to 2.44 per cent.

Located in the Yangtze River Delta, Jiaxing is in East China's Zhejiang Province and is home to a large number of foreign-funded companies, including some of the world's top 500 companies, Bao said.

"If we do not develop strong business ties with these companies early on, foreign banks will take their business,'' he said.

"We have already felt some pressure from foreign banks, because Jiaxing is about one hour's drive from Shanghai -- which has the country's largest amount of foreign banks.''

Xu Zhendong, a researcher with the International Finance Research Institute, said foreign banks will at first target high-quality clients, after restrictions on them are further lifted.

The world's top 500 companies, many of which have set up offices or joint ventures in China, will undoubtedly become their major targets, Xu said.

Some State-owned and private companies with better financial performance will also become their targets.

Foreign companies, which have strong relationships with foreign banks in China, may give first priority to choose those institutions, he said.

"This phenomenon was quite obvious among companies from Japan and the Republic of Korea,'' Xu said.

The competition could result in redistribution of the high-quality customers among domestic and foreign banks, in turn leading to profit instability for domestic banks.

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