Mainland banks set to resist invaders

Foreign banks operating on the mainland are facing new regulatory challenges and competition from domestic banks following the global economic crisis.

A recent survey by PricewaterhouseCoopers showed that foreign banks have had to adjust to new challenges as the financial crisis has changed the regulatory environment, which is more stringent now, while facing increased competition from domestic banks such as ICBC and the Bank of China with their own ambitions of expanding in every sector.

This also means that foreign banks need to hire more professionals who have experience in dealing with mainland regulatory bodies.

The PwC 'Foreign Banks in China' survey of 42 foreign banks shows that increased competition from domestic banks and a demanding regulatory environment have affected the speed and scope of foreign banks' expansion on the mainland.

For the first time in the five years that PwC has conducted the survey, foreign banks identified increasing competition from domestic lenders as the biggest challenge.

The mainland's massive stimulus package last year resulted in a lending boom by local banks, sidelining many of the foreign banks that have traditionally focused on the corporate lending market.

Some foreign players also expressed concern that the loan surge could lead to a potential rise in non-performing loans next year and in 2012.