Europe’s biggest bank, HSBC, has opened a wholly owned subsidiary in rural China the first foreign lender to do so.

Hubei Suizhou Cengdu HSBC Rural Bank, or more simply HSBC Rural Bank, will offer deposit services to local businesses and individuals and provide loans to agricultural companies.

Other foreign players including Citigroup and Standard Chartered Bank have also shown interest in the nation’s underdeveloped regions, encouraged by the government as it tries to reduce the growing income gap with cities.

With 22 staff and registered capital of RMB10 million, the HSBC subsidiary plans to provide loans to individual farmers next year.

Vincent Cheng, HSBC’s chairman said at the opening, ‘We are extremely pleased to be the first international bank to enter the country’s rural market. There is tremendous promise for economic development in the rural areas. We believe that HSBC’s global network and expertise will help unlock new opportunities for China’s rural population as well as for the bank’s business in this fast-growing, but still largely untapped market.’

Covering an area of about 6,900 sq km, the county-level district of Cengdu in central China has a population of two million and largely relies on export-oriented agriculture.

There has been increased enthusiasm for foreign-funded banks in China’s rural market since banking authorities lifted restrictions in October, approving villages and townships for a pilot scheme.

HSBC has also sent experts to Kaixian County in Chongqing Municipality and plans to open another village bank there, according to the county government.
Source: China.com

Citibank, Standard Chartered and Bank of East Asia are all seeking to follow the lead of HSBC, which in August secured a license to set up a rural bank branch in the Chinese hinterland.

The government’s intention is that large financial institutions with rural branches will help redistribute the country’s wealth from the cities to the countryside.

The problem is that China already has one of the most extensive rural banking systems in the world and has problems with bad loans.

Agricultural Bank of China, one of China’s ‘big four’ banks, has closed many of its more remote branches in an attempt to become more economically viable.

There are also more than 32,000 rural credit co-operatives, which resemble micro-credit institutions in other parts of the world.

This year, however, rural incomes are rising — partly thanks to rising food price inflation and partly to the renewed political emphasis on the rural economy.

If farming incomes continue to rise, HSBC could even find opening a branch in the Chinese countryside has more benefits than originally thought. Our illustration shows HSBC’s China CEO Richard Yorke and volunteers from the bank demonstrating, perhaps, how to become sort of truly rural. In the picture they are planting trees in Paotaiwan Wetland Park in Shanghai for National Tree Planting Day.
Source: Financial Times

The Shanghai Stock Exchange is considering listing large multinational companies.

Que Bo, assistant general manager of the Shanghai Stock Exchange, told a conference on China’s capital market that the stock market was ‘doing market research for the plan and will get some results soon. To strengthen the blue-chip market, we have been planning to list such multinationals as HSBC, Coca-Cola and Siemens, which have developed very well in China.’

Que Bo said the Shanghai Stock Exchange would continue to lure more large domestic firms into the market and draw Hong Kong H-shares and Chinese firms registered and listed in Hong Kong, better known as red chips.

He also said the exchange would not only expand but also strengthen the blue-chip market, which was essential to sharpening the competitive edge of China’s capital market. In addition to the Hushen 300 index futures, the Shanghai Exchange planned to introduce more financial derivatives to bolster the blue-chip market.
Source: Windows of China

Official data suggests staff in China’s well-known financial institutions are now making RMB15,000 yuan ($2,000) a month and more.

China Construction Bank (CCB) Chairman Guo Shuqing said the most troubling problem facing his bank is a shortage of talented professionals. CCB, one of China’s four biggest commercial banks, wants to set up branches in New York and London and the bank is ‘hungry for people specialized in financial accounting, securities analysis, portfolio management, interest rate pricing and foreign exchange pricing’.

As the country moves to a more market-oriented financial system, financial talents are at a premium because there are so many issues to deal with. And as the government opens the banking sector, the human resources battle for the best and brightest in the financial sector has escalated.

HSBC China Chief Executive Richard Yorke, seen in our illustration,  said earlier this year said finding enough experienced staff and training them adequately was the toughest issue confronting the bank. HSBC expects to grow its headcount from 3,000 to 4,000 in China this year.

Wang Zhao, an economist with Beijing University’s China Center for Economic Research said, ‘There is no real finance education in Chinese colleges.The so-called finance education in colleges only consists of macro-control measures, such as monetary policy, that hark back to the days of the planned economy. What Chinese students want now is courses on securities analysis and portfolio management.’
Source: China View

Overseas banks are speeding up the opening up of networks in China. Players like HSBC (which is the old Honkers and Shankers with a new style and life and gives us our illustration), Standard Chartered and BEA announced branch plans during the week.

Standard Chartered reports it has received approval from the China Banking Regulatory Commission to establish its Hangzhou branch as its first branch in Zhejiang Province. It should take a few months but eventually the Hangzhou branch will provide full foreign currency services for all kinds of corporations, local residents, foreigners and permanent residents of Hong Kong, Macau and Taiwan.

This expansion will extend Standard Chartered’s mainland network to 13 branches.

Meanwhile, Bank of East Asia has gained approval to prepare for setting up a branch in Tianjin which should open in the first part of next year. BEA also has approval to prepare for a branch in Nanjing in Jiangsu Province due to open this year.

Bank of East Asia opened a branch in Wuhan this month. That makes 14 branches it now has on the Chinese mainland.

HSBC Bank is extending its branch network in Central China, the Pearl River Delta and the Yangtze River Delta areas and now has obtained regulatory approval to set up a branch in Changsha, Hunan Province.

Worth noting that last week it was reported that the average waiting time for a customer in a bank was nearly one hour. Plainly this is about to change dramatically.
Source: Shanghai Daily

HSBC Bank (China) Co is extending its branch network in central China, the Pearl River Delta and the Yangtze River Delta areas to support its business expansion.

HSBC China has obtained regulatory approval from the China Banking Regulatory Commission to set up a branch in Changsha, Hunan Province. In addition, HSBC China has applied to establish a branch in Ningbo in the Yangtze River Delta area while its Dongguan branch in the Pearl River Delta area will open in the fourth quarter this year.

Its affiliate Hang Seng Bank also won approval to set up a branch in Ningbo. Overseas, it could be thought the HSBC is pulling in its horns. And, indeed, it has been under some criticism from the international financial press. In China, the reverse is the case.
Source: Shanghai Daily News

Most of the overseas banks incorporated in China’s mainland have recorded sharp growth in both business scales and profits, according to their newly released half-year reports.

HSBC’s deposits and total assets in China’s mainland rose 50% and 26%, respectively, while its pre-tax profit rose 69% to $473 million.
Standard Chartered doubled its business income in the mainland, with pre-tax profit rising 30% to $1.98 billion.
Hang Seng Bank’s loans and deposits went up 50.4% and 93.9%, respectively, and its pre-tax profit from the Chinese mainland accounted for 5.9% of its total, higher than the 4.3% recorded in the same period last year.

An analysis by Shanghai Securities News attributed the good business performance to these banks’ traditional financing advantages. Statistics show that the number of their individual financing clients have risen by 35% to nearly 60%.

Guo Tianyong, director of the China Banking Research Center under the Central University of Finance and Economics, said that foreign-funded banks are quick at finding market demands, and are able to quickly respond to the demands by launching new financial products.

At the same time, overseas banks are also quick in adding new outlets, extending their presence from big cities to mid-sized cities. Standard Chartered will have 40 outlets in 15 cities by the end of this year, while the Bank of East Asia has set up 13 branches and 24 sub-branches in Wuhan, Nanjing and other cities.

The analysis said that compared with Chinese banks, foreign-funded banks pay more attention to medium and small enterprise loans and private banking business.
Source: China View

HSBC has received regulatory approval to open a wholly owned banking subsidiary in rural China. It is the first overseas bank to get the go-ahead from the China Banking Regulatory Commission (CBRC) to offer rural services.

The subsidiary, HSBC Rural Bank, will be based in Cengdu County of the city of Suizhou in Central China’s Hubei Province.

HSBC Rural’s operation is expected to cover an area of 6,900 sq km, with a total population of two million. The bank states this area has a significant agricultural sector and a rapidly developing rural economy.

Stephen Green, HSBC’s group chairman, said: ‘We very much support China’s policy priority to develop its rural economy and intend to play a full part in these ambitions.’ He said HSBC has extensive experience in rural finance in Brazil, India, Indonesia, the Philippines and Mexico.

Vincent Cheng, chairman of HSBC, said his bank saw great potential for economic development in China’s rural areas. He said, ‘Our rural bank will serve the needs of China’s agricultural sector, which is undergoing rapid development, aiming to provide tailored financial services to rural communities and companies.’

The CBRC has introduced new rules to expand market access for financial institutions seeking to provide banking services in rural areas.
Source: China Daily