In recent years, the two-way opening-up of China’s financial industry has achieved remarkable results. As the banking industry, which occupies an important position in China’s financial system, it is also the “vanguard” of the two-way opening-up of the financial industry, and performs well in terms of openness and international competitiveness.
has established 41 foreign legal person banks in China
Bank Of China Limited(601988) in recent years, the industry has greatly relaxed the access standards and business scope of foreign-funded institutions, such as lifting the restrictions on the proportion of foreign shares and relaxing the requirements for shareholders’ qualifications such as asset scale and operating years. In April 2021, the CIRC decided to further optimize the proportion of foreign-funded banks’ exposure to the regulatory environment of large banks, and exempt the parent bank from the regulatory requirements of foreign-funded banks. With the significant improvement of the opening-up of Bank Of China Limited(601988) industry and the continuous implementation of opening-up measures, the attraction to foreign financial institutions has increased significantly.
Since the introduction of the two-way financial opening-up policy, foreign banks have increased their investment in China, and a number of high-quality foreign-funded institutions with professional characteristics have opened in China. According to the data disclosed by the CBRC, since 2018, the CBRC has approved foreign capital to establish more than 100 bank and insurance institutions in China. As of the first half of last year, foreign banks had set up 41 foreign legal person banks, 115 foreign bank branches and 139 representative offices in China. The total number of business institutions of foreign banks in China reached 930, and the total assets of foreign banks were 3.73 trillion yuan. Since 2020, JPMorgan Chase, Barclays Bank, Bank of New York Mellon and Fubon Huayi bank have respectively completed capital increase to their institutions in China.
As an important city for the layout of foreign-funded institutions, Beijing, the capital, is stepping up the construction of China (Beijing) pilot free trade zone and national comprehensive demonstration zone for the expansion and opening up of service industry (hereinafter referred to as the “two zones”). Public information shows that the two-way opening-up level of Beijing’s financial industry has been continuously improved. In 2021, 94 of 102 tasks in the financial field of the “two districts” of the capital were implemented. Last year, the pilot of domestic and foreign currency integrated fund pool business took the lead in landing in Beijing to further improve the centralized operation level of cross-border funds of multinational companies, which will attract more multinational companies to set up global or regional fund management centers in Beijing.
“Foreign financial institutions attach great importance to the Chinese market. Many foreign banks regard the Asia Pacific emerging market represented by China as one of the key investment markets at the group level.” One belt, one road, is open to the outside world. Yuan Xiaohui, a researcher at Bank Of China Limited(601988) Research Institute, told the Securities Daily reporters that foreign banks are highly concerned about the growth opportunities of China’s capital market liberalization, RMB internationalization, “one belt and one road”, offshore wealth management and the construction of the Bay area. At present, large international financial groups and foreign banks in major neighboring countries have a relatively perfect network layout in the Chinese market. With the steady progress of China’s high-level opening to the outside world, the business of foreign banks in China will usher in more development opportunities.
Bank Of China Limited(601988) is strengthening foreign cooperation
At the same time, China’s commercial banks are also strengthening foreign exchanges and cooperation to meet diversified and international investment needs. Recently, Postal Savings Bank Of China Co.Ltd(601658) and Deutsche bourse released the “Stoxx postal bank ESG index”, which provides a reference for domestic and foreign investors to understand China’s A-share market. “This index is an innovative measure for Chinese and foreign financial institutions to deepen cooperation and jointly promote sustainable development. It is also a manifestation that financial institutions attach importance to ESG investment and actively promote sustainable economic and social development. It is an important manifestation of more diversified asset allocation and increasing attraction in the financial market.” Yuan Xiaohui thinks.
The reporter noted that in addition to foreign banks increasing the opening of foreign legal person banks and increasing capital to institutions in China, there are also many cases of Chinese banks participating in shares by foreign banks.
In 2021, DBS Bank successfully completed the subscription of 1.352 billion fixed increase shares of Shenzhen rural commercial bank, and the shareholding ratio of DBS Bank reached 13%, becoming the largest shareholder of Shenzhen rural commercial bank. Liu Feng, deputy to the National People’s Congress and Secretary General of Bank Of China Limited(601988) Industry Association, said during the two sessions of this year that banks with highly concentrated equity can strengthen the internal check and balance and supervision mechanism of shareholders by introducing domestic and foreign strategic investors. “The introduction of international banking institutions as strategic investors by small and medium-sized banks can optimize the corporate governance structure and introduce advanced management experience and technology.” In an interview with Securities Daily, he Yanlin, a professor at the school of finance of the University of international business and economics, said that the advantages of foreign banks in enterprise management concept, operation mechanism and corporate culture will also create good development conditions for China’s small and medium-sized banks.
Two way opening is like walking on two legs. The banking industry should not only “please come in”, but also unswervingly “go out” to face a broader international stage.
According to the data of the Ministry of Commerce, in 2021, China’s foreign investment and cooperation developed steadily, and the foreign direct investment of the whole industry was 936.69 billion yuan, a year-on-year increase of 2.2% (equivalent to 145.19 billion US dollars, a year-on-year increase of 9.2%). As a Chinese funded bank with the highest degree of globalization, Bank Of China Limited(601988) solidly promotes global operation and actively serves the new development pattern and high-level opening to the outside world. According to the bank’s 2021 semi annual report, as of the end of June last year, the total deposits and loans of its overseas commercial bank customers were US $552918 billion and US $455495 billion respectively, an increase of 13.97% and 11.70% respectively over the end of 2020. BOC has one belt, one road, 556 overseas branches, covering 61 countries and regions in the world, including 25 countries with a belt and a road. Industrial And Commercial Bank Of China Limited(601398) 2021 half year report one belt, one road network, covering 49 countries and regions in the first half of last year, including 125 branches in 21 countries and regions along the “one belt and one road”. The total assets of the bank’s overseas institutions exceeded US $460 billion, and the pre tax profit exceeded US $2 billion, a year-on-year increase of 15.8%.
Yuan Xiaohui told reporters that in addition to serving Chinese enterprises and individual customers, Bank Of China Limited(601988) industry going out is also conducive to banks’ own ability to improve the allocation of global financial resources and comprehensive financial services. In addition, it is also conducive for banks to seize the opportunity of China’s deepening opening to the outside world, strengthen cooperation with foreign financial institutions, and make up for the “short board” of financial licenses, financial products and services.
She also reminded that at present, the Bank Of China Limited(601988) industry also needs to pay close attention to country risk, financial market risk and credit risk in overseas markets to improve its risk management ability. Fully study and judge the impact of external factors such as global monetary policy adjustment, covid-19 epidemic spread and regulatory policy adjustment on relevant overseas market businesses, and prudently expand relevant businesses.
