The Bank of China Group in Hong Kong has defended Beijing's decision to close Guangdong International Trust and Investment Corp (Gitic), saying the move marks the first step towards the establishment of a mature mainland financial system. The SAR would benefit from the reform process, said Liu Jinbao, chief executive of the group's Hong Kong-Macau Regional Office. Mr Liu said Gitic's closure had abolished 'the customary practices of Chinese enterprises'. These were a reliance on their state background and an acceptance they would never be closed down. 'It should be noted that the Gitic incident is an inevitable event during the progress of the mainland's financial reform and its impact is only of a temporary nature,' Mr Liu said in a speech at a lunch hosted by the Hong Kong General Chamber of Commerce. He admitted the Gitic incident had caused troubles in the Hong Kong banking sector, leading to lower profits for some SAR banks. 'From the long-term perspective, the financial reform in the mainland is favourable for the establishment of a mature financial system compatible with the development of a market economy. 'It resolves the issues of financial risks fundamentally and contributes to long-term stable economic growth,' he said. Mr Liu would not elaborate on how the problems created by Gitic's closure could be resolved, but did say: 'Being the closest partner of the mainland, Hong Kong will certainly benefit.' SAR banks are increasingly concerned about a potential increase in their level of non-performing loans to the mainland. As of December 31, exposure to Gitic and its subsidiaries was $6.2 billion.