| China to Open Renminbi Business to Foreign Banks |
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| Saturday,November 18,2006 Posted: 01:22 BJT(1722 GMT) China Daily |
China's announcement Thursday that foreign banks can soon deal in renminbi retail business has prompted a flurry of international lenders to announce their plans to incorporate in China.
The rule, which marks the implementation of one of China's banking commitments to the World Trade Organization (WTO), allows foreign-funded banks to deal in the renminbi retail business across the country after December 11.
In order to better protect the interests of domestic depositors, the Chinese Government is encouraging foreign banks to incorporate locally when dealing in renminbi retail business.
The release of the rule was welcomed by foreign banks, with a few immediately announcing they are ready to become among the first to incorporate in China.
Foreign banks wishing to open a new outlet in China must first receive approval from the nation's banking regulator, which will issue its decision within six months of getting an application, according to the new rules. The overseas bank must then complete preparations to open the new outlet within six months of receiving permission from the China Banking Regulatory Commission, according to the rules.
The Chinese government, while preparing to open the market, is trying to bolster the ability of its own banks to cope with more competition. China has spent about US$400 billion on bailouts since 1998, according to Fitch Ratings' estimates, and four of the five largest have held initial public offerings to raise capital.
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