China will require foreign banks to start unveiling consolidated operations from next month, sharpening supervision ahead of a full market opening in 2007 and resolving the longstanding complaints of overseas lenders.
Foreign banks must report their branches' operations - as a whole - twice a year, according to rules which take effect on April 1, the China Banking Regulatory Commission (CBRC) said on Monday.
Banks such as Citigroup Inc and HSBC Holdings Plc had previously treated each branch as a single unit, meaning an inability to juggle resources on a national basis. Bankers had protested that the old reporting system hampered productivity and wasted time.
"We've been urging this for a long time. It's the practice elsewhere in the world," said one foreign banking executive. "It might make things easier for us, but the significance is that it will enable regulators to keep a closer eye on operations."
An increasing number of banks are setting up shop in China, with overseas lenders now maintaining three branches each, on average. That could swell in coming years.
In commitments made upon joining the World Trade Organisation, Beijing had promised to offer foreign banks unfettered access to a market flush with $1.3 trillion in personal savings by the end of 2006.
"The tradition to ask each branch to report their operations has made it impossible to see an overall picture of a foreign bank's operations," regulators said in a statement published on the CBRC's Web site (www.cbrc.gov.cn).
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