New rules for overseas lenders
2/12/2003 16:38
China is working on new banking rules to remove the boundary barrier to
overseas lenders, the state council announced yesterday at a news conference.
After the reform, overseas lenders, including the wholly foreign-funded
banks and the joint ventures, will be treated in the same way as their local
competitors - with equal rights, equal tax rates and equal bank card
autonomy.
"In the long run, a uniform standard (for both local and foreign
banks) is a must," said Liu Mingkang, chairman of China Banking Regulatory
Commission (CBRC). "It will largely benefit the overseas lenders."
Relaxation on two services, renminbi banking and foreign bank card issuance,
will promise them hefty returns.
Overseas banks hail the outcome and take it
as part of China's moving towards its WTO commitment.
"WTO rules require that
China should eventually end its political interference into the banking sector
so that the market rule will finally have a say," Citibank spokesman said
yesterday.
"CBRC's recent moves all led us to the conclusion that an
impartial market is about to come, where we'll find no difference in any ICBC or
any HSBC," he predicted.
As for now, the reform will first affect the banks
that have registered in China as an independent corporate body only. Local
branches of the overseas banks will be exempted until CBRC works out a more
advanced package to hedge against their parent lenders' variables.
Changes in
the tax policy, though, brings disadvantages to the foreign lenders, raising the
long-existing 15 percent preferential tax rate to somewhere near 33 percent, to
equal that of the local lenders.
Vicky Xu / Shanghai Daily news
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