Contents

 Previous Page

Next Page

Latest developments in the opening-up of banking sector

1. Steady development of foreign banking institutions

As of end-2009, 194 banks from 46 countries and regions set up 229 representative offices in
China; 33 banks from 13 countries and regions were locally incorporated which maintained 199 branches. In addition, there were 2 Sino-foreign joint venture banks (maintaining 6 branches and one subsidiary), 2 wholly foreign-owned finance companies, and 95 foreign bank branches established by 71 banks from 24 countries and regions. Furthermore, 49 foreign bank branches and 32 locally incorporated foreign banks were approved to engage in the RMB businesses, and 54 foreign banking institutions were authorized to engage in derivatives trading activities. In 2009, foreign banking institutions further enlarged their geographic presence in China to meet their business growth needs and development strategies. 

During the recent global financial crisis, the major shareholders of some foreign banking institutions encountered severe financial difficulties. Given the situation, the CBRC reacted prompted by taking various measures to prevent the risk contagion and ensure stable operations of foreign banking institutions in China. Overall, foreign banking institutions have performed well in 2009. As of end-2009, their total assets increased by 0.33 percent year-on-year to RMB1.349 trillion, accounting for 1.71 percent of total banking assets in China; their total liabilities increased to RMB1.182 trillion, accounting for 1.59 percent of the total; and the ratio of their domestic assets to domestic liabilities reached 141.11 percent. Their profits in 2009 amounted to RMB6.446 billion. Their total capital increased by 16.33 percent year-on-year to RMB143.51 billion, accounting for 5.86 percent of total paid-in capital of all banking institutions in China. Their average CAR and Tier-1 CAR registered at 21.22 percent and 20.76 percent respectively. The asset quality of these institutions was relatively sound, with their NPL balance standing at RMB6.18 billion and the NPL ratio at 0.85 percent. Like their Chinese counterparts, foreign banking institutions also increased their loan loss provisions. As a result, their provisioning coverage ratio and adequacy ratio stood at 139.66 percent and 140.86 percent respectively. The overall liquidity of foreign banking institutions remained stable, with their overall liquidity ratio registering at 58.83 percent and with every institution having a liquidity ratio well above the minimum requirement of 25 percent. The reliance of foreign banking institutions on inter-bank market for financing purpose continued to decline, and their loan-to-deposit ratio continued on the downward trend as well.

Table 1: Foreign banking establishments in China (As of end-2009)

Table 2: Foreign bank operations in China (2003-2009)
                                                                                                            Unit: Number of banks,
                                                                                                           RMB100 million, percent

                                                                      * Including headquarters, branches and subsidiaries.

Supplementary Agreement VI to the Closer Economic Partnership Arrangements (CEPA) In a bid to further enhancing the banking cooperation between the Mainland and the Hong Kong, Macao SARs, and in line with the Supplementary Agreement VI to the CEPA, branches of a Hong Kong / Macao bank in Guangdong province are permitted, starting from October 1, 2009, to apply for setting up inter-city sub-branches within Guangdong province. Where the locally incorporated subsidiary of a Hong Kong/ Macao bank owns a branch in Guangdong province, such branch is permitted to apply for setting up inter-city sub-branches within Guangdong province. 

2. Utilization of international funds by the banking industry

In 2009, China's banking industry continued their efforts in introducing foreign capital, expertise, systems and best practices, under the principle of seeking win-win benefits. During the year, one joint stock commercial bank raised HKD30.4 billion in its IPO in Hong Kong SAR, and 7 non-bank financial institutions received USD160 million worth of equity investment from 7 foreign financial institutions. Partnership with foreign institutional investors has not only helped to replenish the capital strength and diversify the shareholding structure of China's banking institutions, but also helped the latter to bolstering their corporate governance, operational management and risk controls. On the other hand, the foreign financial institutions also benefited from their Chinese partners’ local knowledge, branching network and customer base.

3. Expanded overseas presence of China's banking institutions

To keep pace with economic and financial globalization and to meet the needs of Chinese enterprises for cross-border financial services, many Chinese banking institutions redesigned their business strategies to broaden their global presence in order to better serve their customers or tap the opportunities provided by international markets. In 2009, the ICBC was approved to establish a subsidiary in Malaysia and a branch in Abu Dhabi, which made the ICBC the first foreign bank in both countries to have obtained a banking license in several decades. By the end of 2009, 5 large commercial banks have set up 86 branches and subsidiaries outside China, and acquired or invested in 5 foreign banks. Their overseas activities cover commercial banking, investment banking, insurance and other financial services. 5 joint stock commercial banks have also established branches or representative offices or acquired equity in foreign institutions.