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China to relax curbs on foreign bank branches
China is set to make it faster and easier for foreign banks to set up branches in a bid to attract more overseas investment into the crucial but creaky industry, foreign bankers said on Thursday.
Beijing will relax a requirement that foreign banks have to operate a representative office for two years before it can be upgraded into a branch, and is set to lift an unwritten rule that limited them to opening one branch a year, they said. Representative offices are allowed only to offer advisory services that will not earn a profit. A spokesman for the China Banking Regulatory Commission on Thursday declined to comment on specifics, but said regulators would soon announce changes to existing regulations. "We would probably release (new information) around December 1, when there would be one year left before allowing foreign banks to enter the market fully," the official said. "It may take time to discuss, finalise and update the regulations." Foreign banks, itching for access to over $1.5 trillion in Chinese savings, are barred from most forms of lucrative retail businesses until 2007 -- when China is due to open its financial industry wider under World Trade Organisation commitments. Three senior bank executives told Reuters foreign banks and regulators had reached consensus on relaxing branch restrictions, after overseas lenders lobbied hard for abolishing administrative steps that have held up expansions. "Now, you can open branches directly in any city in mainland China that the
CBRC has sanctioned," said a Shanghai-based executive with a Hong Kong bank. The
executive did not elaborate.
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