Shanghai's first private bank to land in FTZ

Authorities have previously said that a free trade account system will be rolled out during the first half of this year, likely bringing significant changes to restrictions on cross-border capital flow under capital accounts and will be a key feature of banking in the zone, according to ANZ.

Banks are encouraged to grant more autonomy to branches in the Shanghai zone but should place prudent oversight over liquidity, compliance and cross-border risks.

"The overall tone of today's release reflects that the Shanghai authority sticks to the negative list approach and adopts a 'file and use' spirit to regulate banking activities. We believe that adopting this approach is an important step to support China's financial innovation," ANZ economists said.

To date, 11 Chinese and 20 foreign banks have registered in the FTZ, and have been actively involved in a range of cross-border yuan transactions authorities have permitted since earlier this year, helping multinational firms improve efficiency and costs in deploying funds and accessing cheaper offshore financing.

During the first four months of this year, firms in the zone have secured 4.5 billion yuan in offshore loans. A total of 12 firms have participated the cross-border yuan pooling pilot, mobilizing yuan-denominated funds of 4.6 billion. Cross-border settlement rose 90 percent from a year ago to 42.6 billion yuan.

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