Chinese banking regulator keen to change rules to attract HK lenders to Guangdong

Mainland banking regulator keen to change rules to make it easier for city's banks to set up shop, as part of drive for free-trade zone

PUBLISHED : Thursday, 23 January, 2014, 1:19am
UPDATED : Thursday, 23 January, 2014, 1:19am

The mainland's banking regulator is studying the feasibility of introducing new rules to make it easier for Hong Kong banks to operate in Guangdong province, as part of efforts to build the region into a free-trade zone.

"We are working on new policies and models to boost collaboration and make the banking systems in Hong Kong and Guangdong more open to each other," said He Xiaojun, deputy chief at the China Banking Regulatory Commission's (CBRC) Guangdong office, in a press briefing in Guangzhou yesterday. He did not elaborate on specific measures.

"The Guangdong-Hong-Kong-Macau free-trade zone is strategically important for banks on both sides and we'll grab this opportunity to open up the financial market," He said.

Guangdong officials have been calling for a free-trade zone covering the province, Hong Kong and Macau. Ever since its competitor Shanghai was chosen to set up the nation's first free-trade zone in September last year, Guangdong has been lobbying hard for permission to create a similar zone.

Xinhua reported last night that the central government had approved 12 new free-trade zones, including ones in Guangdong and Tianjin, but that it could take more than a year to hammer out specific plans.

Beijing has vowed to establish more such zones as it pushes forward liberalisation in interest rates, capital account and foreign exchange controls to reorient the economy away from its manufacturing focus as well as to internationalise the yuan.

HSBC, for one, is eyeing more locations to spread its wings on the mainland, weighing a branch in the Nansha economic zone in view of the area's own FTZ preparations, said Lin Xun, HSBC's China managing director and head of the Guangdong office.

"I believe the free-trade zone scheme would be beneficial both ways, compared with the current Cepa [Closer Economic Partnership Arrangement, between Hong Kong and the mainland] scheme, which only benefits one side," Lin said.

"China is a very big market. If Guangdong, Hong Kong and Macau can develop together as a bigger zone, the opportunities for Hong Kong would be unlimited. Free trade would maximise the co-operation in the Pearl River Delta and it is a very big opportunity for Hong Kong."

As of the end of last year, six Hong Kong banks had set up a total of 61 branches in Guangdong, according to CBRC data.

HSBC has 33 outlets in Guangdong, making it the largest foreign bank by number of branches on the mainland, followed by Bank of East Asia.