By Wang Zhenghua (China Daily)
Updated: 2007-08-10 08:56

HSBC said yesterday it has received regulatory approval to open a wholly owned banking subsidiary in rural China.

It is the first overseas bank to get the go-ahead from the China Banking Regulatory Commission (CBRC) to offer rural services.

The subsidiary, HSBC Rural Bank, will be based in Cengdu County of the city of Suizhou in Central China's Hubei Province, said Hongkong and Shanghai Bank, a unit of HSBC Holdings, one of the world's largest banking groups.

HSBC Rural's operation is expected to cover an area of 6,900sqkm, with a total population of 2 million. This area has a significant agricultural sector and a rapidly developing rural economy, the bank said.

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Stephen Green, HSBC's group chairman, said: "We very much support China's policy priority to develop its rural economy and intend to play a full part in these ambitions."

The CBRC has introduced new rules to expand market access for financial institutions seeking to provide banking services in rural areas.

HSBC has extensive experience in rural finance in Brazil, India, Indonesia, the Philippines and Mexico, Green said.

Vincent Cheng, chairman of HSBC, said his bank saw great potential for economic development in China's rural areas.

"Our rural bank will serve the needs of China's agricultural sector, which is undergoing rapid development, aiming to provide tailored financial services to rural communities and companies."