China Banking Regulatory Commission, Report on Opening up China's Banking Industry to Foreign Investment

Issued: March 2007

Main Contents: Foreign banks are encouraged to establish or restructure existing branches into banks with legal personality registered in China. Foreign-invested banks with legal personality may provide various types of foreign exchange and renminbi services to clients. The registered capital and operating capital of foreign-invested banks with legal personality and their subordinate branches shall be identical as that of Chinese-invested banks. Foreign-invested banks shall determine deposit or loan interest rates and the rates for various service charges, deposit reserves and provisions for bad debts according to the laws and regulations that apply to both Chinese- and foreign-invested banks. Foreign-invested banks with legal personality shall comply with the regulatory requirements on the administration of asset-liability ratio concerning capital adequacy ratio and concentration of loan granting as well as on affiliated transactions.

The unification of the regulatory standards for foreign-invested banks and Chinese-invested banks shall be accelerated, particularly those for foreign-invested banks registered in China and Chinese-invested banks. The unification of domestic regulatory standards and international regulatory standards shall also be accelerated. The basis for regulation and the external environment of the banking industry shall be improved, and the full implementation of international accounting standards in the banking industry shall be promoted.