In order to protect local banks from foreign banks, which are usually much more competitive and market-oriented, Chinese monetary authorities banned foreign banks from offering renminbi-denominated products.
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Morgan Stanley is on Monday expected to announce that it has obtained a coveted Chinese commercial banking licence, a surprise move that trumps its US investment bank rivals.
The licence will pave the way for it to offer renminbi-denominated products to corporations operating on the mainland. Typically, overseas banks have to operate for at least five years on the mainland, clear tough regulatory hurdles and obtain a commercial banking licence before being able to apply to conduct business in local currency.