Only commercial banks are allowed to control wholly-funded foreign banks and foreign joint venture banks in China.

The precondition required by China's new regulation on Administration of Foreign-Funded Banks aims to curb the connective trade and business between banks and their shareholders. With commercial banks holding control stakes, domestic banks can borrow advanced corporate governance experiences, improve their risk control capability.

Currently, vast number of wholly-funded foreign banks and foreign joint venture banks are controlled by financial entities such as investment funds.

The regulation allows foreign-funded banks to conduct Renminbi business for Chinese citizens before Dec. 11 in accordance with China's commitment to the World Trade Organization. The regulation encourages foreign banks to incorporate locally and set up subsidiaries so as to minimize risks for Chinese depositors.

Source:佚名