Pudong Bank takes first step into free-trade zone
Shanghai Pudong Development Bank looks set to spearhead a move by domestic and foreign peers to secure a foothold in Shanghai's planned free-trade zone, after yesterday announcing a plan to open a branch inside the zone.
In a filing to the Shanghai stock exchange, the lender said its board had approved the establishment of a branch in the zone, which is expected to be launched at the end of this month. It did not disclose further details, adding that the proposal was subject to regulators' approval.
The announcement signals the lender has already won support from the national and city authorities for the branch.
Shanghai is eyeing a Hong Kong-like free port as it seeks to build the mainland's first free-trade zone, where regulatory hurdles on investments and trade would be removed to create a free-market environment.
A series of financial-sector reforms are expected to be conducted in the area, which covers nearly 30 square kilometres.
"Financial reform within the zone is beneficial to accumulate experience for the nationwide financial reform and yuan internationalisation," JP Morgan economist Zhu Haibin said in a research report.
"In the long term, the free-trade zone may be developed into an offshore financial sector onshore."
Although Pudong Bank did not say what businesses the branch would be involved in, analysts said it would facilitate clients' cross-border investments and asset-management arrangements.
Companies or individuals depositing money at the branch would be exempt from regulations and oversight by the authorities since the zone would be deemed an offshore market.
The mainland is also expected to ease restrictions on foreign banks opening branches in the zone.
A guideline on the operations of the zone has yet to be published, but Shanghai-based companies have already drawn up plans to take advantage of the potential liberalisation.
Last week, Liu Shaoyong, chairman of China Eastern Airlines, said it expected to soon receive approval to develop cross-border e-commerce businesses in the zone.