HSBC launches private banking in China

(Agencies)

HSBC Holdings, Europe’s largest lender, launched private banking services in China on Monday as foreign banks including Citigroup target the country’s fast-growing market for services to wealthy clients.

 

Chinese regulators had given HSBC approval to offer private banking services in Shanghai, Beijing and the southern city of Guangzhou, the bank said.

 

It will target individuals with a minimum net worth of $10 million, it said, while the minimum initial deposit for an account will be $1 million.

 

HSBC and other foreign lenders are targeting China’s rapidly growing wealthy class, as full deregulation of the country’s banking industry has allowed them to conduct local-currency business with Chinese individuals.

 

“The creation of wealth in China is a unique phenomenon in that greater wealth is being generated by a relatively younger age group as compared to the rest of the world,” Monica Wong, HSBC private bank chief executive for Asia, said in a statement.

 

Annual economic growth of more than 10 percent has created more than $345,000-millionaires in mainland China, according to a Merrill Lynch report.

 

HSBC, which has set up a wholly owned China unit, posted more than $1 billion in pretax profit in China last year.

 

HSBC rivals CitiBank and Standard Chartered have already started private banking businesses in China, while Bank of East Asia has said it planned to launch such services in the second quarter.

 

Local banks, including Industrial and Commercial Bank of China and Bank of Communications , in which HSBC holds a stake, have also joined the competition to offer services for wealthy Chinese clients.

 

 

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             copy from chinadaily

 

China agrees to open up financial service industry

(Xinhua)
Updated: 2007-12-13 16:30

BEIJING — China and the United States have agreed upon specific steps for foreign companies to enter China’s financial service industry following two-day high-level economic dialogues.

China said it would complete a study of foreign equity participation in the banking sector by the end of 2008 and make relevant policy recommendations.

Foreign-invested companies including banks will be allowed to issue RMB denominated stocks and bonds, while mutual funds administered by Chinese banks will be allowed to invest in the US stock market, according to a statement from the US government.

This has created new opportunities for US firms in a variety of securities business, said the statement.

But China will resume licensing of new joint-venture securities companies and allow foreign securities firms to expand their operations in China to include brokerage, proprietary trading and fund management.

Several foreign firms, including some US firms, are already in advanced stages of establishing new joint ventures, says the statement, without elaborating.

Shortly before the dialogue, China raised the quota for qualified foreign institutional investors, which allow foreign mutual funds to invest in China’s domestic stock market, from 10 billion US dollars to 30 billion US dollars.

U.S. Treasury Secretary Henry Paulson called this progress “moderate”, affirming that opening China’s financial markets to foreign competition strengthens the financial backbone of the Chinese economy. “It’s critical to China’s goals of spreading the benefits of growth to all Chinese people,” he said.

A statement from the Chinese side said the policies should be carried out in accordance with relevant prudential regulations.

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Foreign Banks triple China profit growth

(Bloomberg)
Updated: 2007-07-04 17:12

Profit growth at Citigroup Inc, ABN Amro Holding NV and other foreign banks in China tripled this year after they were allowed to offer local-currency services, a central bank report said. Overseas banks earned a combined 3.05 billion yuan ($401 million) in the first five months, up 43 percent from a year earlier, the People’s Bank of China said in a research report published by China Securities Journal. Profit growth accelerated from an average 14 percent over the past five years.

China fully opened its banking industry in December, sparking a rush among foreign banks to add outlets and workers to compete for the nation’s $2.2 trillion of household deposits. They’re still dwarfed by the likes of Industrial & Commercial Bank of China Ltd, which earned 18.7 billion yuan in the first quarter.

“A rising tide lifts all the boats,” said Zhang Xi, a banking analyst at Beijing-based Galaxy Securities Co. “Foreign banks will never achieve the economies of scale to pose a serious challenge to domestic rivals given their current speed of expansion in China.”

As of May 31, 75 foreign banks operated 186 outlets in 25 Chinese cities, according to the report. They had 514.3 billion yuan of outstanding loans and 305 billion yuan of deposits. Their non-performing asset ratio stood at 0.6 percent at the end of May.

Overseas banks’ combined profit from local-currency services more than doubled to 1.3 billion yuan through May, today’s report said.

“Business has never been so good,” Jeroen Drost, ABN Amro’s Asia chief executive, said in an interview yesterday. “The key challenge here is to keep up with the growth.”

Foreign banks expect to double their total workforce in China to almost 36,000 by 2010, according to a survey by PricewaterhouseCoopers LLP published in May. HSBC Holdings Plc, Citigroup, Standard Chartered Plc, Bank of East Asia Ltd and eight others have become locally incorporated to offer yuan- denominated bank cards and mass-market services this year.

 

Forex investment company to invest in Blackstone

(Xinhua)
Updated: 2007-06-23 15:19

The U.S. Blackstone Group would receive the 3 billion U.S. dollars to be invested by China’s state foreign exchange investment company “shortly after its public offering,” the Chinese company said Friday.

According to the deal struck between the two sides, the Chinese investment company must hold its shares for at least four years.

The state forex firm agreed to buy Blackstone shares at a 4.5 percent discount on the IPO price — set at 31 dollars a piece, a source with the soon-to-be-established Chinese firm said Friday.

Blackstone said it will use the funds raised in the IPO to buy back some equities from its old shareholders, repay short-term loans, and invest in current as well as new businesses.

Although the deal has been widely welcomed by Wall Street, some U.S. lawmakers, in a throwback to the Cold War, urged the U.S. Security and Exchange Commission (SEC), the Department of Treasury and the Department of Homeland Security to delay Blackstone’s IPO due to what they called national security reasons.

In a letter to the SEC and the other two departments, Democratic senator Jim Webb said “in making this request, I express my concern regarding the enormity of this public offering and the large investment from a foreign government.”

However, the SEC ignored his proposal and approved Blackstone’s IPO, saying an IPO may be delayed only if a company had issued “material misstatements or omissions.”

As one of the core investors, the state forex investment company expects to gain profits from the private equity firm’s investments and from a rise in share prices, Wang Jianxi, Chairman of the China Jianyin Investment Limited (China Jianyin), said earlier in May.

China Jianyin, a state-owned investment company, will be merged with the new state forex investment company.

He noted the forex investment company, which is expected to go into operation this year, may also entrust its forex capital to other world leading asset management firms to seek higher earnings.

By the end of March, China’s foreign exchange reserves had jumped 37 percent from a year earlier to exceed 1.2 trillion U.S. dollars, which are mainly invested in low-yielding U.S. dollar bonds.

China’s top legislature is to discuss an issuance of special treasury bonds by the Ministry of Finance for the country’s foreign exchange investment at a six-day session beginning on June 24.

Apart from its role in reducing excessive liquidity, the bond issuance will also help to buy foreign reserves from the central bank to finance the investment of the state foreign exchange investment company, said Li Yang, director of the finance research institute of the Chinese Academy of Social Sciences.

 

Shanghai Gold Exchange to enroll foreign bank members

 June 9 – China’s central bank said on Friday it had agreed in principle that foreign banks operating in China could be enrolled as members of the Shanghai Gold Exchange (SGE) in a move that, industry analysts say, marks the opening of China’s gold market. “It will help combine the domestic and overseas gold market, increase the market liquidity and reduce transaction risks,” said Zhou Hongtao, a gold investment analyst. Zhou said the foreign members would bring advanced trading and managerial experience and contribute to leveling off the price gap between domestic and overseas markets. The central bank has told the SGE to set up as soon as possible a regulatory plan for qualification of foreign members and submit the plan to the central bank for approval. The central bank said the plan would be put on record with the State Administration of Foreign Exchange along with the results of foreign members’ qualification examinations submitted by the SGE. An official with the SGE said that, so far, several foreign banks including HSBC and Standard Chartered Bank had contacted the exchange. Meanwhile, the SGE is negotiating with its Hong Kong counterpart and the Airport Authority Hong Kong for future cooperation in trading, clearing and delivery, said the official. The SGE, approved by the State Council and founded by the People’s Bank of China, is a non-profit and self-managing legal entity which organizes gold, silver and platinum transactions. The SGE adopts a membership system. Its members consist of qualified commercial banks and corporations registered in China. They are licensed to produce, smelt, process and trade precious metals including gold, silver and platinum. The SGE now has 150 members.

 

HSBC, Citigroup set for debit card debut

China’s banking regulator on Thursday said Citigroup, HSBC and two others were expected to become the first foreign banks to issue local currency debit cards to consumers in China. The Shanghai branch of the China Banking Regulatory Commission (CRBC) had received applications for debit card issuance from Citigroup and Bank of East Asia, while the other two, HSBC and Standard Chartered, were expected to apply soon, said Wang Huaqing, assistant to the chairman of the CBRC.

Mr Wang said foreign banks were currently limited to issuing debit cards, and it was unclear whether they would be allowed to issue credit cards in the future.

Currently, we are receiving applications only for debit card issuance instead of credit card issuance, due to current Chinese banking rules,” Mr Wang told reporters on the sidelines of a banking summit in Shanghai.

He declined to give a timeframe for when foreign banks would begin issuing debit cards, saying only that the approval process was going very smoothly so far and a final decision would be up to CBRC’s Beijing headquarters.

The four were also the first foreign banks to win Beijing’s approval for local incorporation earlier this year and all four launched business operations at their wholly owned China units in April.

Foreign banks not incorporated domestically are not allowed to issue any type of bank cards independently, while those with domestically incorporated Chinese units must still apply to regulators for approval of any card issuance.

Debit cards in China allow the user to withdraw cash from automatic teller machines (ATMs) or to make payments directly to merchants that are bank partners, within the amount deposited in the account.

 

HSBC, Citigroup set for debit card debut

China’s banking regulator on Thursday said Citigroup, HSBC and two others were expected to become the first foreign banks to issue local currency debit cards to consumers in China. The Shanghai branch of the China Banking Regulatory Commission (CRBC) had received applications for debit card issuance from Citigroup and Bank of East Asia, while the other two, HSBC and Standard Chartered, were expected to apply soon, said Wang Huaqing, assistant to the chairman of the CBRC.

Mr Wang said foreign banks were currently limited to issuing debit cards, and it was unclear whether they would be allowed to issue credit cards in the future.

“Currently, we are receiving applications only for debit card issuance instead of credit card issuance, due to current Chinese banking rules,” Mr Wang told reporters on the sidelines of a banking summit in Shanghai.

He declined to give a timeframe for when foreign banks would begin issuing debit cards, saying only that the approval process was going very smoothly so far and a final decision would be up to CBRC’s Beijing headquarters.

The four were also the first foreign banks to win Beijing’s approval for local incorporation earlier this year and all four launched business operations at their wholly owned China units in April.

Foreign banks not incorporated domestically are not allowed to issue any type of bank cards independently, while those with domestically incorporated Chinese units must still apply to regulators for approval of any card issuance.

Debit cards in China allow the user to withdraw cash from automatic teller machines (ATMs) or to make payments directly to merchants that are bank partners, within the amount deposited in the account.

 

Foreign banks approved to enter into Chinese gold market

Chinanews, Shanghai, June 7 – China has moved one step forward in transferring its gold market into a global market.

 The People’s Bank of China, China’s central bank, has given its permission for the Shanghai Gold Exchange (SGE) to introduce some foreign banks to become its members. HSBC, Standard Chartered, Canadian-based Scotiabank, UBS, and French bank Societe Generale SA have become the first five foreign banks that have obtained licence to become a member of the Shanghai Gold Exchange, the Shanghai Securities Journal reported.

However, foreign banks should not expect that Chinese gold market will become fully open to them. They may still face some practical problems with regard to their operational mode and the quotas they can have, said Shen Xiangrong, chairman and general manager of the Exchange.

 At the fourth Shanghai Gold Exchange Membership Forum held on Wednesday, Wang Yu, head of the Foreign Currency and Gold Market Management Department at central bank’s Financial Market Section, said the central bank had already approved SGE’s request for absorbing some foreign banks to become its members. This may open a new important page in China’s gold market history, said Wang.

“After the approval, the central bank is considering loosing the control on gold import and export,” Wang said.

He said that the State Administration of Foreign Exchange had already signed related documents, promising to take measures to ease the way for the opening of the gold market.

The five foreign banks are the five largest price offerers in London Bullion Market Association.

 

Overseas banks can apply for card business now

June 5 – China Banking Regulatory Commission (CBRC) is accepting bank card applications from overseas banks, sources with the CBRC told Xinhua Monday.

Overseas banks that meet CBRC requirements and related standards can apply to run bank card operations in China, the sources said. China will allow foreign incorporated banks that qualify for RMB retail business to issue RMB bank cards which meet the operational and technical standards of China’s banking cards, according to the decision reached at the China-U.S. Strategic Economic Dialogue held last month.

 These banks will enjoy the same treatment as Chinese banks, it said. The move will allow overseas banks to offer a full range of RMB services. Under the Administrative Rules on Foreign Banks, which took effect last December, overseas banks can issue their own brand of RMB bank cards when they register as local entities.

However, technical problems such as risk control and payment systems still need to be clarified in the new banking card regulations. Many overseas banks that have incorporated in China or have plans to do so are waiting for the new bank card regulation to move forward. An initial draft of the regulation has been completed by the Legislative Affairs Office of the State Council, the People’s Bank of China and the China Banking Regulatory Commission, an earlier report said.

Meanwhile, overseas banks, including Bank of East Asia (China) Ltd., HSBC and Standard Chartered Bank, have said that they will announce their plans when the new regulation is issued. Chinese banks have issued more than 1.1 billion bank cards — 1.08 billion debit cards and some 50 million credit cards — according to figures released by the People’s Bank of China.

 

Second batch of overseas corporate banks to be opened soon

Chinanews, Shanghai, May 28 – DBS Bank, Hang Seng Bank, Mizuho Corporate Bank and Wing Hang Bank have become the second batch of overseas corporate banks approved by China Banking Regulatory Commission, and will start operation soon. DBS Bank China was opened on May 28, to become the first of the second batch of overseas corporate banks. The headquarters of all of them are in Shanghai, except Wing Hang Bank.

The third batch of overseas corporate banks will start their business in the third quarter of 2007, including Deutsche Bank, OCBC Bank, JP Morgan, CITIC Ka Wah Bank and Nanyang Commercial Bank. Currently, besides DBS Bank, there are four other overseas corporate banks operating in the Chinese mainland: HSBC, Standard Charted, Citibank and Bank of East Asia.

CBS Bank is confident in its business in banking and financing for small and medium-sized enterprises, cash management and capital market. “CBS will not overlook personal users either,” said Huang Gangcheng, the president of CBS Bank China. In the next few years, CBS China will establish 30 or 40 new subbranches in Greater Beijing Area, the Yangtze River Delta, Fujian Province and the Pearl River Delta.