HSBC and BEA approved to operate in Shanghai free-trade zone
Banks given approval for sub-branches in mainland's first free-trade area
HSBC and Bank of East Asia have won approval to set up a presence in the Shanghai free-trade zone, putting them among the first foreign banks there following similar approval granted to DBS and Citigroup last month.
Both banks plan to set up a sub-branch in the zone, according to separate statements from HSBC and BEA.
The Shanghai free-trade zone, the mainland's first such zone, was launched at the end of September. Many hope that a wide range of banking services, a freer foreign exchange regime and market-oriented interest rate reforms will take root in the zone.
HSBC said it would launch a sub-branch in the zone by early next year, and would initially focus on international banking services targeting corporate customers in the zone. It would then expand its service scope as the regulatory framework for the new pilot zone evolved.
HSBC, BEA and Standard Chartered, were the first foreign banks to set up incorporated subsidiaries on the mainland after 2007, allowing them to conduct banking transactions in yuan for mainland residents.
More foreign banks are expected to have a presence in the zone. Many of them, including Standard Chartered and Singapore's United Overseas Bank, were contacted by the China Banking Regulatory Commission in the last quarter to get feedback on the zone and encourage them to set up there.
But some foreign banks have opted to wait and see how the free-trade zone evolves before committing to setting up a presence there.
The free-trade zone is expected to serve as a laboratory for financial reform experiments before they are rolled out elsewhere on the mainland.