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QINGDAO TODAY
在线翻译:
szdaily -> Business -> 
Nation further opens up banking, insurance sectors
    2019-05-06  08:53    Shenzhen Daily

CHINA took another step in opening its US$44 trillion financial sector to the world, announcing plans to remove limits on ownership in local banks and scrap size requirements for foreign firms that operate onshore.

Among the changes, overseas insurance groups will be allowed to set up units in the world’s second-biggest economy, the country’s banking and insurance regulator said last week.

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC), said the commission plans to soon issue 12 new measures.

That includes cancelling a requirement for foreign banks to have US$10 billion in assets before being allowed to set up a legal entity in China and removing approval procedures for foreign banks to conduct yuan business, Guo said.

China also plans to remove a requirement for foreign banks to have US$20 billion in assets before being able to set up a branch, he added. The rules will also remove limit that foreign insurance brokerage companies must have more than 30 years of operating experience and assets of more than US$200 million to carry out related business in China. Requirements for both foreign and Chinese companies to invest in and set up consumer finance companies will also be relaxed.

He said these changes would take place in the near term, but did not give an exact timeframe.

The rules are an incremental step along the path to opening China’s financial system, months after foreign firms were permitted majority stakes in local securities joint ventures.

While the changes could lead to full-blown local bank takeovers — a potential shortcut into the market — the likes of JP Morgan Chase & Co. and Goldman Sachs Group Inc. may have to wait years before finance in China looks like Wall Street or the City of London.

“We are seeing a trend of China gradually and steadily opening up its financial industry to the outside world,” said Ge Shoujing, a Beijing-based senior analyst at the Reality Institute of Advanced Finance.

HSBC Holdings holds shares in Bank of Communications Co., and while the London-based firm hasn’t recently commented on increasing that ownership, Bank of Communications’ board secretary said last year it would be open to such a move. Wall Street titans from Morgan Stanley to UBS Group AG operate securities joint ventures in China, and have seized on the financial opening to seek greater stakes in the units.

“China is delivering on promises made to further open the financial markets to foreign companies, both big and small,” said Liao Chenkai, a Shanghai-based analyst at Capital Securities Corp. “This may also be a possible response to the trade war, pushing China to further open its markets.”

The CBIRC in August removed some limits on foreign ownership of Chinese lenders and bad debt managers, following through on a pledge made in late 2017 to amend rules and welcome global players. The latest changes scrap all ownership restrictions, though the regulator will still have to approve deals.(SD-Agencies)

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