As one of only a handful of foreign banks incorporated on the mainland, ABN Amro is now ready to go toe to toe against China's domestic banks for the hearts, minds and pockets of the country's 1.3 billion consumers.

While the bank was largely limited to foreign currency-denominated business, and a smidgen of yuan-denominated corporate services before, local incorporation will allow it to expand its operations to retail banking, including wealth management and credit cards.

'From a legal perspective, you become a different entity and are subject to the local regulatory, accounting and reporting standards,' said Ms Wong, reflecting on the recent incorporation in Shanghai. 'The composition of the board must also be in line with Chinese company law, with everything approved by the China Banking Regulatory Commission [CBRC].'

Ms Wong added that, even if the bank was not moving to new premises, it was necessary to reapply for existing licences and relevant permits. This involved close liaison not just with the CBRC, but also the State Administration of Foreign Exchange, the People's Bank of China - for transaction-related matters - and the tax bureau, fire department, public security bureau and local government authorities responsible for each location.

She explained that it was also necessary to revise key commercial agreements and re-do contracts with customers, vendors, employees and other counterparts. In some cases, basic terms could be revised after issuing a standard notice and receiving no objections. However, the changes often required specific consent, especially when dealing with larger depositors.

A full-time team of 20 in-house staff steered everything, assisted by four consultants - a law firm looking at local contracts in China, another advising on international aspects, an auditor and a programme manager.

'As a bank, you have to be very compliant and avoid any ambiguity,' Ms Wong said. 'You just accept that as part of the job.'

She added that the change of status had important implications. Under the previous branch structure, mainland regulators had assessed lender limits and capital adequacy ratios for the bank's China operations based on the parent company's holdings.

Now, being subject to the rules for local entities, different strictures applied. Specifically, this meant maintaining a 75 per cent loan to deposit ratio, regardless of ABN Amro's international financial standing or the fact that it was a 100 per cent shareholder.

'So, if you don't yet have the retail or deposit base like the Chinese banks, you can't support larger loan portfolios,' Ms Wong said.

However, she noted this was unlikely to hinder business expansion. In the first half of this year, the bank's mainland operations had seen a 76 per cent year-on-year increase in revenue, while client deposits had grown 111 per cent.

'The potential is not a myth,' Ms Wong said. 'It is already a profitable business and, remember, the effect from offering renminbi services has not yet kicked in.'

On the retail side, the initial objectives include providing credit cards, mortgages and wealth management products for local customers.

'Chinese people are good investors and they are tired of just getting 2 per cent on a savings account or time deposit,' Ms Wong said. 'They want other wealth management solutions and products presented to them.'

She added that a foreign bank operating in China could no longer rely on the novelty factor or 'halo effect' to attract clients. It had to prove its worth by offering superior service and innovative products, which gave an upside opportunity.

'You have to reach out to the client and find solutions that can move them. This is either a financial incentive or making them see that the salesperson who approaches them can be trusted with their wealth,' she said.

On the commercial banking side, the aim is to offer more value-added and trade services. The focus will be on supporting mainland companies looking to expand internationally, helping them achieve better cash flow management and to benefit from the use of various derivative products.

The bank hired about 300 staff in China this year, taking the total to more than 1,000. Headcount will continue to increase as the number of outlets grows from 14 - including Beijing, Guangzhou and Chengdu - to about 20 by the end of next year.

'We are developing our own pipeline of talent, but it takes time and is not easy with the speed of expansion and constant competition for talent,' Ms Wong said.

'In China, there is some brilliant young talent, kids with extremely high IQs. They just need guidance, coaching and exposure.'

ABN Amro

With a history dating back to 1824,

ABN Amro ranks 11th in Europe and 20th in the world based on Tier 1 capital. It has more than 3,000 branches in more than 60 countries, more than 97,000 full-time staff, and total assets of Euro742.9billion (HK$7.9 trillion).