No more waiting, as CBRC pledges to remove barriers on foreign banks seeking yuan business
China’s top banking regulator said on Wednesday it will remove the one-year waiting period on foreign banks seeking an in-country license for yuan trading
China will relax restrictions on foreign banks seeking to conduct yuan trading, removing an eligibility requirement that stipulated foreign banks needed to be operating in-country for one year, according to the nation’s top banking regulator.
The rule change will allow foreign banks to begin yuan trading upon setting up in China, a significant relaxation that reflects Beijing’s effort to push ahead with financial opening.
The waiting period was trimmed to one year from three years in January 2015, following complaints from foreign banks that the restrictions were blocking their growth in China.
The one-year waiting period was among the policies that would be scrapped, the China Banking Regulatory Commission (CBRC) said in a statement on its website on Wednesday.
The CBRC also said it will supports foreign banks to conduct government bond trading.
But the financial regulator did not provide a timetable for when the change will take effect, noting instead that the revision will involve the amendment of rules and regulations.
In November, sweeping financial opening measures were announced by deputy Minister of Finance Zhu Guangyao.
China has already vowed to relax limits on foreign ownership in joint ventures offering financial services on the mainland over the next five years.
“The CBRC statement showed China is acting on its financial open-up pledge step by step,” said Xu Wenbing, the chief banking analyst at Bank of Communications in Shanghai.
Though he welcomed the step, Xu said the real impact on the banking sector could be limited, as most big-name foreign banks have already operated in China far more than one year.
In the statement on Wednesday, the CBRC also pledged to relax restrictions on yuan-denominated personal deposits for foreign banks that have yet to set up a local subsidiary. Such banks can only take in term deposits of more than 1 million yuan (US$151,100) from Chinese savers.
There are no such restrictions for foreign banks that have already set up a local subsidiary, including the big-name lenders like HSBC Holdings, Citi, Standard Chartered and JP Morgan.
By the end of 2016, foreign banks have set up 39 locally incorporated subsidiaries and 166 representative offices among 1,031 outlets in 70 mainland cities, according to the CBRC. Foreign banks are still deemed niche players in China, as they account for less than 2 per cent of China’s banking assets.