Foreign banks operating on the mainland were likely to put on hold plans to pursue local incorporation to secure domestic status this year because of the United States subprime credit crisis and a tougher operating environment, analysts said. 'We have already seen some banks, mainly US and European lenders, hold back on their plans to incorporate locally on the mainland,' said Edwina Li Shuk-yin, a financial services partner at KPMG. The mainland banking market was opened up further to international players last year when foreign lenders were given permission to expand their operations to retail yuan business if they incorporated locally. But Ms Li said the total number of foreign banks seeking domestic status through local incorporation this year could drop 50 per cent on last year's numbers. She also expected it could take 12 to 18 months for lenders to obtain all the necessary approvals compared to a six- to 12-month wait last year, since the mainland government's priority was now the Olympic Games and this might affect the approval process. While foreign lenders were still interested in expanding their mainland business and taking advantage of local incorporation status, some had not yet decided what business model to adopt, Ms Li said. Billy Mak Sui-choi, an associate professor at Hong Kong Baptist University's department of finance and decision sciences, said capital could be a major concern for banks, particularly those that had seen the price of their shares drop after the subprime crisis.