The State Council of China has released amendments to the Foreign Bank Administrative Regulations of China with effect from 1 January 2015.
Some key points are as follows:
- Foreign banks are no longer required to have operated a representative office in China for two years before opening the first branch in China. In addition, it is not required for a foreign-invested bank to put RMB100 million into an onshore branch as working capital nor to have made profits for two consecutive years before making an application of conducting RMB business.
- This further marks the opening up of the banking sector to foreign investments by lifting various restrictions applicable to foreign-invested banks in respect of market entry and business operations, especially in RMB business.
- This will be appealing to foreign banks looking to invest or expand their existing operations in China. The opening-up of RMB business to foreign-invested banks and foreign banks’ onshore branches is a particularly encouraging move towards “national treatment” of foreign investments.
- However, the regulations (including strict foreign shareholding restrictions) governing foreign investment in domestic banks remain unchanged.
Please read the full briefing here.