Foreign banks given time to meet requirements

Locally incorporated foreign banks will be granted a five-year grace period in which to meet the government required 75% loan-deposit ratio, AFP reported, citing state media. The proposal has been distributed among foreign banks for comment and a final version is expected to be released at the end of November. China is to allow foreign banks to fully participate in local currency lending from December, in accordance with its WTO accession commitments. The requirement that loans do not exceed 75% of deposits is one of a series of regulations introduced with the intention of putting foreign and domestic banks on a level footing. As the foreign banks have had little opportunity to deal in local currency, their yuan deposits are limited, which means that loans currently exceed deposits. A three-year grace period is also likely to be granted to foreign banks before they are prevented from lending over 10% of their capital to a single client.