China Banking Regulatory Commission (CBRC) officially announced yesterday its approval for the Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, Standard Chartered Bank and Bank of East Asia to establish locally registered branches to operate in China.

The four overseas banks are allowed to start a full range of forex services and RMB business, including RMB business for Chinese citizens, with the establishment of their locally registered subsidiary banks, though they will be mainly engaged inforex business and RMB business for companies and institutional clients.

Foreign banks were previously prevented from offering foreign-currency services to individuals, although they could provide both local and foreign-currency services to enterprises.

The four banks will officially open business after their licenses have been registered with the State Administration for Industry and Commerce. HSBC and Citibank both intend to start operations as soon as possible.

"Today's approval marks the beginning of an unprecedented new chapter in Citi's long history in China," Citigroup's China Chief Executive Officer Richard Stanley said.

HSBC will appoint its Chairman Zheng Haiquan as the Chairman of the locally registered corporation in China and the current China CEO of HSBC Richard Yorke as the President and CEO of the new subsidiary bank.

"We are glad to get the approval from the CBRC to establish a locally registered bank in Shanghai," Zheng said.

China is a very important market for HSBC, and the local incorporation will have a positive impact on the long-term development of the Chinese financial market, according to Zhang.

Eight other banks are in the process of preparing to establish a locally registered subsidiary bank with corporate status, an official with the CBRC said.

They are JPMorgan Chase & Co., ABN Amro Holding N.V., Hang Seng Bank Ltd., Mizuho Financial Group Inc.'s Mizuho Corporate Bank, DBS Group Holdings unit DBS Bank, Bank of Tokyo-Mitsubishi UFJ, Wing Hang Bank Ltd., and Overseas-Chinese Banking Corp.

Ten out of the 12 overseas banks plan to locate their headquarters in Shanghai, China's financial center, while JP Morgan picked Beijing and Wing Hang will be headquartered in the southern city of Shenzhen.

Three more foreign banks - Nanyang Commercial Bank Ltd, Citic Ka Wah Bank Ltd., and United Overseas Bank Ltd - have filed applications with the CBRC to establish locally registered corporations and their applications are under consideration.