FTZ to see 1st private bank soon

Shanghai's first privately-owned bank will be set up soon in the pilot free trade zone, the local banking regulator said at a conference yesterday.

Earlier, the China Banking Regulatory Commission's Chairman Shang Fulin said 10 private enterprises will establish five private banks under a trial that further relaxes market entry for private investors.

Market watchers expect Shanghai-based conglomerates Fosun Group and Juneyao Group to be the first to receive the green light to open a private bank in the FTZ.

The Shanghai Office of the CBRC yesterday unveiled detailed regulations for commercial banks to carry out FTZ business in a bid to innovate the market. A dedicated division of the CBRC will be set up in the FTZ to oversee banking operations within the zone.

The new CBRC rules allow bank headquarters to relax certain requirements for their FTZ outlets, such as the loan-to-deposit ratio that regulates the maximum amount of loans a lender can extend based on the deposits it holds for a certain period of time.

The rules also let banks in Shanghai without a presence in the zone carry out FTZ business, which is defined as financial services provided for companies based in the zone.

Bank branches within the zone should prioritize cross-border business that facilitates investment and trade although they can carry out both FTZ business and regular banking services.

Within the zone, domestic banks, locally-incorporated foreign banks, and foreign banks that have branches on China's mainland do not need regulatory approval for senior executive appointment at the sub-branches.

They also are exempt from such approval to set up and close sub-branches but only if they have already set up a branch in the FTZ.

The Big-Five banks — the Industrial and Commercial Bank of China, China Construction Bank, the Agricultural Bank of China, the Bank of China and the Bank of Communications — have set up branches in the zone.