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SAR seeks mainland support for banks

(China Daily HK Edition)
Updated: 2006-11-17 08:54

Hong Kong is in talks with mainland authorities to seek more preferential policies for its lenders once Beijing fully opens up its banking sector under WTO norms, a senior Hong Kong Monetary Authority (HKMA) official said yesterday.

Mainland regulations demand an overseas bank's branch to have a minimum fixed deposit of 1 million yuan (US$125,000). But HKMA external department executive director Julia Leung hoped Hong Kong banks would be exempted from that.

"We hope to strengthen communication with the mainland regulator and strive for more concessions under the Closer Economic Partnership Agreement (CEPA)." Leung told reporters on the sideline of a forum on Hong Kong-Beijing Financial Services Cooperation.

HKMA has also requested Beijing to see if banks based abroad could be allowed to transact business in overseas currencies, including HK dollars, on the mainland, Leung said, because such an arrangement would help Hong Kong's lenders.

Leung's comments came after the mainland announced a set of new rules on Wednesday for overseas banks operating on the mainland.

The mainland has been urged to lower its threshold further for local banks, too, she said.

HSBC Asia Pacific's strategic and economics adviser George Leung said the threshold was indeed high, requiring foreign banks' loan-deposit ratio to be 75 per cent in 18 months. So she hoped Hong Kong banks could make use of CEPA to extend the grace period.

The Deputy Director General of China Banking Regulatory Commission (CBRC), Beijing Bureau, Yang Liping, said CEPA had quickened the inflow of Hong Kong banks into Beijing. Five Hong Kong banks, HSBC, Nanyang Commercial Bank, Bank of East Asia, Hang Seng Bank and CITIC Ka Wah Bank, have already set up branches in the capital.

"Hong Kong-based banks have made great progress in Beijing since the inception of CEPA...," he said. Bank of East Asia was the first to transact business in yuan and CITIC Ka Wah Bank the first to open a branch in Beijing through CEPA.

Up to the end of September, there were 35 foreign banks' branches in Beijing with total assets of more than US$10 billion.

Bank of Beijing general manager Yan Xiaoyan said that the full opening up of the banking sector could increase interaction between domestic and foreign banks. "It can beef up the governance of local banks, too."

Bank of Beijing is well-prepared for the full opening up of the market. "We introduced talents from Hong Kong in 2003 and Dutch bank ING purchased 19.9 per cent stakes in the bank last year," he said.

Deputy Director-General of the Operation Office of the People's Bank of China Jiang Zaiyong said it was not likely that the overseas banks' threshold would be lowered. "The standard of foreign banks has to be consistent with that of local banks," he said.



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