Four overseas-funded banks have become the first overseas financial institutions approved to offer Renminbi (RMB) business to China's domestic non-foreign-invested enterprises. The green light was given by the country's banking regulator early this week.  

According to the China Banking Regulatory Commission (CBRC), the New York-based Citibank, Hong Kong's HSBC and Bank of East Asia and Japan's Mizuho Bank will start trial running of RMB business, including issuing RMB loans, to domestic non-overseas-invested enterprises, mainly state-owned enterprises (SOEs) and private enterprises.

Confident of the market prospect, HSBC's Shanghai branch, the first among HSBC branches to submit business applications last year for the approval, has started preparation and is expected to start business within the four-month preparation period given by the CBRC, according to the latest issue of International Banking News.

Zhang Dandan, HSBC's spokesman for the China region, said "HSBC might not need such a long time" since it has rich experience as one of the first overseas banks to offer RMB business to overseas-funded enterprises since 1997.

The spokesman of the East Asia Bank also said the time frame is very "flexible", adding that some Chinese customers, including both SOEs and private companies, have contacted them about the business.

Although foreign bank's RMB business for domestic non-foreign-invested enterprises will not pose a threat to domestic commercial banks in the short term, experts warned domestic banks must speed up innovation of financial products and improve service efficiency to catch up in the long run.

The four are the first among 11 overseas banks that applied to the CBRC. Foreign banks were only allowed to offer RMB business to foreign-invested enterprises before the approval.

(Xinhua News Agency February 12, 2004)