Foreign Banks to Finally Open for Business in Beijing

China’s capital will finally open to foreign banks after years of preparations, the Shanghai Securities newspaper said Sunday.

“About 50 overseas financial institutions have contacted the Beijing authorities exploring possibilities of establishing joint ventures,” the newspaper said.

It gave no details of the discussions.

Beijing will allow at least five foreign banks to set up branches in the capital in 1995, it said.

The State Council, China’s Cabinet, has already approved the opening of cities to foreign banks, including Shenyang, Shijiazhuang, Xi’an, Hefei, Hangzhou, Suzhou, Wuhan, Chongqing and Chengdu.

Sources in the Beijing branch of the central bank, the People’s Bank of China, told the newspaper the first group of foreign banks entering the capital would be large ones with good business records that would finance the city’s economic growth.

“We will also make sure that they come from different countries or regions,” it quoted a source as saying.

Last year, China approved 16 foreign-bank branches, a foreign-funded bank, a Sino-foreign finance company and an insurance company branch, and 102 representative offices of overseas financial institutions, the China Daily quoted an official of the central bank as saying.

Foreign financial institutions won approval to set up 118 operational organizations in Shanghai, Guangzhou, Shenzhen, Tianjin and nine other large or coastal cities, it said.

By 1994, 101 foreign-financed banks, banking branches and finance companies had started operations, with total assets valued at $11.8 billion, up 55.6% from 1993.

Savings last year in foreign banks increased 12% to $2.49 billion, while their loans rose 82% to $7.5 billion, of which 90% were granted to domestic companies, especially foreign-financed ventures.

Most foreign-financed banks have begun to make profits two years after opening in China, netting $92.61 million last year, the central bank official said.

With the improved competitive ability of domestic financial institutions and the enhanced supervisory ability of the central bank, Beijing is studying the possibility of allowing foreign banks to conduct business in the local renminbi currency, he said.

Beijing also plans to increase the number of foreign insurance companies, with one or two expected to win licenses in 1995.

Currently, just two foreign companies have been allowed to conduct business in Shanghai, he said.