Opening-up measures set to benefit overseas finance firms

Shanghai's next round of development will see the playing field levelled, enabling overseas companies to compete more freely in the market

The financial industry will play a key role in the new round of opening-up in Shanghai, which has been laid out in the 100 policies covering finance, services and advanced manufacturing, intellectual property rights, imports and legal system announced by the municipal government on July 10.

As Shanghai is building itself into an international financial hub, much emphasis has been placed on this sector — 32 of the newly released policies are related to finance.

Under the new policies, foreign banks would be allowed to set up branches and subsidiaries in Shanghai. Commercial banks would also be able to set up financial asset investment companies and wealth management companies with no foreign capital limit.

Wu Qin, director of the off-site business department for foreign banks at the Shanghai branch of the China Banking Regulatory Commission, said that some Japanese banks are currently applying to be the underwriter of yuan-denominated bonds, also known as Panda bonds.

"Overseas banks can give full play to their abundant resources of overseas clients by being the underwriter of Panda bonds. With this policy, we can also attract more overseas institutions to issue bonds in China," she said.

The approval time for newly established financial institutions has also been largely reduced, according to Wu. Cathay United Bank from Taiwan, which was formerly scheduled to open its Shanghai branch in the fourth quarter of the year, would be able to begin operations in early September. Wu pointed out that the bank would have previously required three months to gain approval for opening a branch. Since the implementation of the new policies, the bank took just three weeks.

As of the end of June, overseas banks from 29 countries and regions have set up branches in Shanghai, with the total number of overseas banks amounting to 232, more than double the figure in 2001 when China entered the World Trade Organization.

The total assets of overseas banks in Shanghai also reached 1.53 trillion yuan ($225.6 billion) by the end of June, up 12.6 percent year-on-year, and overtaking the 5.5 percent year-on-year growth registered by the entire banking industry in Shanghai during the first half of the year.

At present, overseas banks account for about 10.2 percent of the total assets of the Shanghai banking industry. The figure has remained above 10 percent since October last year, much higher than the national average of 2 percent.

Zhang Guangping, an inspector at the Shanghai branch of the China Banking Regulatory Commission, said that the recently released opening-up policies are in line with China's economic development pace and the global strategy of overseas banks that have sped up their localization efforts in the country.

In addition, foreign-controlled securities companies, investment funds and futures companies will be allowed to establish operations in Shanghai to provide brokerage and consulting services under the new policies. Moreover, foreign insurance services will be expanded to include both insurance agencies and assessment services. Foreign-controlled life insurance companies will also be allowed to operate in the city.

Xu Huizhi, the general manager of British risk management and insurance intermediary Willis Watson in China, said that overseas insurers will be no different from domestic ones under the new policies. While the company was previously limited to serving large corporations, they can now reach out to individual clients like their domestic competitors.

Rong Honggang, the general manager of British company JLT Insurance Brokers in China, said that his company will now also be able to reach small- and medium-sized enterprises and high net worth individuals in China as a result of the opening-up policies.

Contact the writer at shijing@chinadaily.com.cn