China Defends Draft Bank Rules – Rick Carew

From The Wall Street Journal:

Draft revisions to rules governing foreign bank operations in China are intended to protect Chinese depositors as the country opens its retail market to foreign lenders at the end of this year, a banking regulator told a local financial publication Thursday.

The proposed revisions have prompted concern among some analysts and foreign bankers, as the changes could require foreign banks to restrict the scope of their business in China unless they take the potentially costly step of incorporating their local operations as Chinese entities.

Foreign banks now own their Chinese branches from overseas headquarters. The rule change would require foreign banks to incorporate locally and create management structures similar to domestic banks if they wish to do yuan retail business. This also would give Chinese regulators more supervisory control over the units.[Full Text and Subscribers Only]

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