Article 1 These regulations are formulated for the purposes of meeting the needs of opening up to the outside world and economic development, strengthening and improving the supervision of foreign-funded banks, and promoting the safe and sound operation of the banking industry.

Article 2 The term "foreign-funded bank" in these regulations means any of the following institutions approved to be established within the territory of the People's Republic of China in accordance with relevant laws and regulations of the People's Republic of China:

(1)a wholly foreign-funded bank funded by a foreign bank on its own or jointly with any other foreign financial institution;

(2)a Chinese-foreign joint venture bank jointly funded by a foreign financial institution with a Chinese company or enterprise;

(3)a branch of a foreign bank

(4)a representative office of a foreign bank.

The institutions listed in subparagraphs (1) to (3) of the preceding paragraph are hereinafter referred to collectively as operational foreign-funded banks.

Article 3 The term "foreign financial institution" in these regulations means a financial institution that is registered outside the territory of the People's Republic of China and is approved or licensed by the financial regulatory authority of its home country or region.

The term "foreign bank" in these regulations means a commercial bank that is registered outside the territory of the People's Republic of China and is approved or licensed by the financial regulatory authority of its home country or region.

Article 4 A foreign-funded bank shall abide by the laws and regulations of the People's Republic of China, and shall not harm the national, social and public interests of the People's Republic of China.

The legitimate activities and lawful rights and interests of a foreign-funded bank shall be protected by the laws of the People's Republic of China.

Article 5 The banking regulatory agency of the State Council and its local offices (hereinafter referred collectively to as the banking regulatory agency) shall be responsible for the supervision of foreign-funded banks and their business activities. Where other supervisory departments or institutions that supervise foreign-funded banks and their business activities are specified in laws or regulations, such provisions shall prevail.

Article 6 The encouraging and guiding measures formulated by the banking regulatory agency of the State Council on the basis of the regional economic development strategy and other related policies of the State shall be implemented after submission to and approval by the State Council.

Chapter II Establishment and Registration

Article 7 Establishment of a foreign-funded bank and its branch shall be subject to examination and approval by the banking regulatory agency.

Article 8 The minimum registered capital for a wholly foreign-funded bank or a Chinese-foreign joint venture bank shall be 1 billion yuan (US$126.6 million) or an equivalent amount in convertible currencies. The registered capital shall be paid-in capital.

Where a wholly foreign-funded bank or a Chinese-foreign joint venture bank establishes a branch within the territory of the People's Republic of China, the branch shall receive from its parent bank a non-callable allocation of not less than 100 million yuan (US$12.7 million) or an equivalent amount in convertible currencies as its operating capital. The total amount of operating capital allocated from a wholly foreign-funded bank or a Chinese-foreign joint venture bank to all its branches shall be no more than 60 per cent of the parent bank's aggregate capital.

A foreign bank branch shall receive from its parent bank a non-callable allocation of not less than 200 million yuan (US$23.3 million) or an equivalent amount in convertible currencies as its operating capital.

The banking regulatory agency of the State Council may, by taking into account the business scope of an operational foreign-funded bank and the need of prudential supervision, increase the minimum requirement on the above-mentioned registered capital or operating capital, and determine the RMB-denominated proportion of capital.

Article 9 The shareholder of a proposed wholly foreign-funded bank or a Chinese-foreign joint venture bank, and the foreign bank applying for establishing a branch or a representative office, shall satisfy the following requirements:

(1) having persistent profit earning capacity, good reputation, and no record of material violation of laws or regulations;

(2) the shareholder of a proposed wholly foreign-funded bank, the foreign shareholder of a proposed Chinese-foreign joint venture bank, and the foreign bank applying for establishing a branch or a representative office, shall have experience in international financial activities;

(3) having in place effective anti-money laundering systems;

(4) the shareholder of a proposed wholly foreign-funded bank, the foreign shareholder of a proposed Chinese-foreign joint venture bank, and the foreign bank applying for establishing a branch or a representative office shall be subject to effective supervision by the financial supervisory authority of its home country or region, and the application shall have been approved by the financial supervisory authority of its home country or region; and

(5) other prudential requirements prescribed by the banking regulatory agency of the State Council.

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