China encourages cooperation between domestic, foreign banks
(Xinhua)
Updated: 2004-03-17 14:40

The China Banking Regulatory Commission (CBRC) will encourage and support the diversified cooperation in stock ownership, business management and technology between domestic and foreign banks, said a senior CBRC official in Beijing Tuesday.

Cooperation between Chinese and foreign banks has become a "new task" for study after foreign banks were allowed in and with the further opening of Renminbi, the Chinese currency, services on the Chinese mainland, said Tang Shuangning, vice-chairman of the CBRC, at a forum in Beijing.

"Such cooperation is good for both Chinese and foreign banks," Tang said. "Clients of Chinese banks can also benefit from such exchanges and cooperation."

Chinese banks' current cooperation with foreign banks only focuses on services like interbank loans and international settlement of accounts but market analysts say both sides still have great potential in stock ownership and technology cooperation.

"Foreign banks can quickly cut into the Chinese market through buying shares of China's domestic banks," said Lai Xiaomin, director of the Beijing Municipal Bureau of Banking Regulation.

China is honoring a commitment to the World Trade Organization to open its financial markets -- in all places and currencies -- to foreign competitors by 2006, while foreign banks have been bolstering their presence in the country.

Outstanding foreign currency loans from foreign banks had soared to 13 percent of the total of financial institutions in China by the end of last October, but foreign banks hold a mere 1.4 percent of the combined banking assets.

The CBRC gave the green light last month to four banks -- the UK-based Hong Kong and Shanghai Banking Corporation (HSBC), New York-based Citibank, Hong Kong's Bank of East Asia and Japan's Mizuho Bank -- to offer Renminbi services for domestic enterprises in 13 designated cities, including Shanghai, Shenzhen and Dalian, as well as the eastern provinces of Jiangsu and Zhejiang.

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