- The Washington Times - Tuesday, March 20, 2007

BEIJING (AP) — China yesterday approved four foreign banks to begin local currency services to individual Chinese customers, opening up access to the country’s $4 trillion in household savings and surging demand for credit cards and other financial services.

The four banks approved are the locally incorporated entities of Citigroup, HSBC’s Hongkong & Shanghai Banking Corp., Standard Chartered and Bank of East Asia, the China Banking Regulatory Commission said.

Branches of the four will be able to offer a full range of yuan services to Chinese clients once they register their licenses, it said.

Eight other banks from Japan, Hong Kong, Singapore, the United States and the Netherlands have incorporated in China and were preparing to begin offering unrestricted yuan services, the notice said.

Of the 12 foreign banks, 10 have or are planning to establish their Chinese headquarters in Shanghai, the country’s financial services center that already handles 55 percent of foreign banking volume. The other two picked Beijing and the southern manufacturing hub of Shenzhen.

China’s World Trade Organization deadline for opening its retail banking sector passed in December, and Chinese banks have been rushing to upgrade their services.

While the domestic banks are expected to retain the lion’s share of the retail banking market, they are also protected by regulations blocking foreign banks from taking over a Chinese bank under most circumstances.

Total foreign ownership of a Chinese bank is limited to 25 percent, with no more than 20 percent held by a single entity.

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