Xiamen International Bank has been awarded a licence to provide domestic clients with foreign currency services, said a People’s Bank official. The Sino-foreign joint venture bank has a 25 per cent foreign shareholding divided between Japan’s Shinsei Bank, the Asian Development Bank and the US-backed Sino-Finance Group.
This is the first approval granted since China agreed to open domestic banking business to foreign banks as part of its World Trade Organisation agreement. A spokeswoman for HSBC, which has applied for four of its branches to start servicing domestic clients, said the move was a big step in the liberalisation of the market. However, other sources feared that barriers would be put in the way of fully foreign-owned banks. The day before the approval of Xiamen International Bank was announced, the central bank said that foreign banks had to follow the same interest rate guidelines as domestic banks, preventing them from competing by offering more attractive interest rates.