China Loosens Regulations Governing Foreign Invested Banks

The Chinese central government has released amended versions of its regulations for foreign invested banks that loosen conditions for their entry and operation in the domestic market. On 15 October the State Council passed a resolution concerning the amendment of the Foreign Invested Bank Regulatory Rules (). 


The amended foreign invested bank regulations further loosen entry conditions for foreign banks, with measures including:


1) Expanding the scope for foreign invested banks to choose their Chinese cooperative partners for joint-venture banks, by removing the requirement that sole or key Chinese shareholders be financial institutions; 


2) Cancellation of the requirement that foreign invested financial institutions establishing legal person banks in China have total assets of USD$10 billion, or that foreign invested banks establishing branches in China have total assets of $20 billion. 


Foreign invested banks are given greater flexibility in their operating arrangements in China, being permitted to establish their own branches in China in addition to their own wholly invested banks or joint-venture banks simultaneously. 


Foreign invested banks in China were previously prohibited from operating their own legal person banks and their own branches at the same time. The amended regulations also further expand the operating scope of foreign-invested banks in China in the following areas:


1) Adding proxy issuance, redemption and underwriting of government bonds to their permitted operations;


2) Lowering the minimum threshold for renminbi fixed-term deposits accepted by foreign bank branches from Chinese citizens, from 1 million yuan to no less than 500,000 yuan; 


3) Cancellation of examination and approvals for foreign invested banks to undertake renminbi business.



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