China Banking Regulatory Commission issued Decision of China Banking Regulatory Commission on Revising Implementing Measures of China Banking Regulatory Commission on Administrative Licensing for Foreign-funded Banks (hereinafter referred to as “the Decision”) recently, so as to expand opening up of banking industry, advance decentralization further, optimize approval procedure continuously and improve business convenience of foreign-funded banks in China.

In this regard, Fu Lichun, the CRO of Northeast Securities, said to the journalist of Securities Daily, “the Decision increases strength of foreign investment in domestic institution and is the most direct expression of opening up of banking industry. Lowering relevant business approval cost of foreign-funded institution, improving efficiency and unifying market access standard of Chinese and foreign-funded banks are the important expression of international and market-oriented development of Chinese market”.

Researcher Zhao Yayun, from Housheng Think Tank, said to the journalist of Securities Daily yesterday, “the Decision issued by China Banking Regulatory Commission has a strong opening up strength. It opens up market access greatly and offer legal basis to provide certain favorable conditions for foreign-funded banks to enter Chinese market in scale. RMB business of foreign-funded bank is always little, and replacing approval with report system as per the Decision will improve related business quantity dramatically”.

Data show that the assets of foreign-funded bank had accounted for 1.3% of total assets of Chinese bank institutions by the end of 2016. Zhao Yayun believed “though entering Chinese market early, foreign-funded banks suffer many restrictions in operation, e.g. unable to deal with inter-bank borrowing. With a high RMB holding cost and difficulty in business operation, foreign-funded banks have not been developed comprehensively”.

Insiders believe through analysis that besides blocking of some domestic potential investment development paths, it was also related to investment of foreign-funded bank in China, assets scale, special circumstance of parent bank of foreign-funded bank after facing with financial crisis and their own investment decision. The market access standard of Chinese and foreign-funded banks was unified making investment rules of foreign-funded corporation for Chinese banking institution clear and bringing potential space for future development of foreign-funded bank.

According to Zhao Yayun, the larger the Chinese economic scale was, the more overseas investment would be. With the contact of international financial market getting closer, banking industry will intensify opening up in future, including opening up with main trading partners and banking industry of the countries along “the Belt & Road”. Some RMB business and domestic investment bank market may be opened in future.