Russian banks in China. Central Bank of the Russian Federation in China: we have opened

The rate of economic progress of the People's Republic of China is increasing. The country is one of the world leaders in the level of development of many sectors of the economy, science, and technology. Banks in China are also distinguished by their high achievements. In 2017, the Chinese banking system was recognized as the largest on the planet: the volume of assets held by its banking institutions exceeded the assets of European banks by $2 trillion. Four of the world's largest banks are Chinese state-owned. The country is represented by 18 banking institutions in the top 100 banks in the world.

Specifics of the country's banking system

Back in 1997, a thorough reform of the banking system was carried out in China. Its main goal was to prevent a currency and financial crisis. After reform, the activities of all banks are under state control. Supervisory and control functions are assigned to the All-China Banking Regulatory Commission.

The Chinese banking system in 2019 includes three levels. On the first are the People's Bank of China and three state development banks:

• China Agricultural Development Bank.
• State Development Bank of China.
• Export-Import Bank of China.

The second level is the basis of the Chinese banking system. It includes commercial banking institutions, the leaders among which are the so-called Big Four banks:

• Industrial and Commercial Bank of China.
• Construction Bank of China.
• Agricultural Bank of China.
• Bank of China.

In terms of scope, second-tier state commercial banks are both urban and rural. In addition, leasing financial, trust investment and other financial companies that carry out a range of banking operations belong to this level of the banking system.

When answering the question about how many banks there are in China, it should be noted that their number exceeds 800. In terms of per 1 million inhabitants, the average is 0.6 banks.

The third level is occupied by the system of urban and rural cooperation, which finances small and medium-sized businesses in the PRC. It was created to counter the institution of usury. Represented by city credit, agricultural cooperatives, post offices.

Rating of Chinese banks

Many people are interested in the question of which Chinese banks are the best. To give a comprehensive answer to this, below is the rating of Chinese banking institutions.

"Big Four"

The banks that are part of the Big Four control about 60% of the local banking services market.

1. The largest among them is the Industrial and Commercial Bank of China (ICBC). Was founded in 1984. The headquarters is located in the capital - Beijing. This institution is the largest bank on the planet. The amount of his assets as of 2019 exceeds $4 trillion. In China, it accounts for about 1/5 of the banking services market.
2. In second place in the world and in China is the China Construction Bank (CCB). Operating since 1954. The headquarters of the institution is also located in Beijing. The bank's assets are about $3.4 trillion. The institution was created to carry out government mutual settlements, but over time it was repurposed as a commercial one. Today, there are over 14 thousand branches of the China Construction Bank around the world. The largest of them operate in New York, Singapore, Frankfurt, Tokyo, Luxembourg, and Barcelona.
3. Third place in the “Big Four” and in the world belongs to the Agricultural Bank of China (ABC) with its main office in Beijing. It was created in 1951. Its original purpose was to help workers and peasants. Nowadays, the bank's total assets are equal to $3.235 trillion. The institution has about 24 thousand branches around the world, in particular in countries such as Japan, Singapore, South Korea, Australia, USA, Germany, and Great Britain.
4. An honorable fourth place is occupied by the Bank of China. Founded in 1912. This is one of the very first Chinese banking institutions. Today it is a state-owned commercial enterprise and operates in the form of a joint stock company. The total assets are about 2.991 trillion dollars. Bank of China branches successfully operate in about 27 countries, including the Russian Federation. It was in this state that a subsidiary institution was opened, which was named “Bank of China AKB Elos”. There are branches of this institution in Moscow, Khabarovsk and Vladivostok.

List of the largest state and private Chinese banks

State-owned banks are institutions that occupy the first tier of China's modern banking system, described earlier. The functions of the central bank of the People's Republic of China are vested in the People's Bank of China. It was founded in 1948. Initially, the headquarters of the institution was located in the city of Shijiazhuang. In 1949, the main office was moved to Beijing.

The volume of reserves of the People's Bank of China exceeds $3.201 trillion. This is the emission, main payment, settlement and credit center of the state. The key function of the bank is the development and implementation of monetary policy in the country. Its structure includes 9 regional branches and 6 foreign representative offices. More detailed information can be obtained on the information website Bank-China.ru.

State banking institutions, which are development banks, are responsible for the implementation of government programs in three areas:

• Foreign trade: Export-Import Bank of China – Exim Bank of China; Founded in 1994, it has 3 foreign and over 10 regional representative offices and branches.
• Industrial: China Development Bank - State Development Bank of China; year of foundation – 1994; has about 35 branches within the country and in other countries of the world.
• Agricultural: Agricultural Development Bank of China - Agricultural Development Bank of China; year of foundation – 1994.

Among the large private banks in China (after the Big Four) are:

1. Bank of Communications. It is the fifth largest commercial bank in China. The asset size is more than $1 trillion.
2. Ping An Bank. Operates in Shenzhen, Fuzhou, Shanghai. Part of the Ping An Group company. Provides insurance and asset management services.
3. China Merchants Bank. Became the first banking institution owned by corporate legal entities. It has over 500 branches in China.
4. Minsheng Bank. Provides lending services for medium and small businesses. Its structure includes up to 200 branches in China.

Well-known regional commercial banking institutions include Jilin Bank, Dalian Bank, Harbin Bank, and Shengjing Bank.

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What types of activities do Chinese banks engage in?

First, we should list the functions of China's central bank. Thus, the People's Bank is engaged in:

• development and implementation of monetary policy;
• management of the national currency reserve and gold reserves of the PRC;
• emission (issue) of money and control of its circulation;
• trading on the stock market in currencies, as well as government bonds;
• supervision and control over the state of the country's financial market;
• lending to private banking institutions;
• administering the work of all financial institutions in the country in accordance with legal norms;
• formation of the main interest rate;
• determining the rates at which deductions are made to the reserve fund from the money supply received from credit institutions.

Banking services in China are provided to individuals and legal entities by commercial banks. By contacting such institutions, you can:

• take out a loan (for the purchase of real estate, consumer, etc.);
• put money on deposit;
• make payments at the cash desk;
• receive a money transfer;
• pay for goods or services using QR codes;
• sell/buy foreign currency;
• sell/buy precious metals, stones;
• make a contribution in the form of expensive metals;
• use brokerage services;
• open a bank account and get a bank card.

In addition, commercial banks carry out leasing and trust operations (the latter are related to property management and the provision of other services on behalf of the client and in his interests), issue, store, and sell securities, provide guarantees to third parties and act as guarantors for financial transactions.

Account opening procedure for foreigners

Foreign citizens have the right to open accounts in Chinese banks. So, if a citizen of another state works officially in China, he can receive wages on a bank card, and in the currency in which he is comfortable.

If a person plans to receive payment for his work not in yuan, then the contract with the employer must necessarily indicate that wages will be paid in foreign currency.

Chinese banks often open to foreign companies. Acceptable currencies are euros, US dollars, . It is also possible to open an account in Chinese yuan for non-resident companies. Only this procedure is more complex and lengthy than in the case of an offshore account, since the People’s Bank must agree to it.

Package of documents for opening an account

Individuals wishing to open an account in one of the banks in China must provide:

• a completed form with personal data and determining the reason for staying in China.

You will also need to provide a phone number and address in China, and pay 20 yuan in cash per bank card.

To open an account in one of the banks in China, legal entities must have their company in the territory of the PRC. If this is not done, the procedure will be longer and more complicated. The list of documents for legal entities varies from bank to bank.

Money transfer

In banks in China you can receive money transfers from abroad. In addition to direct bank transfer, this can be financial funds sent via:

• Chinese payment system UnionPay;
• international payment systems: MoneyGram, Western Union, Contact and others.

You can also withdraw money from electronic wallets in Chinese banking institutions. These include QIWI, WebMoney and other electronic money systems.

Lending to foreigners

Another pressing issue concerns how banks in China work with foreign borrowers. In order for a representative of another country to take out a loan here, he needs to find a guarantor among Chinese citizens.

In theory, loans from Chinese banks are available to all foreign legal entities and individuals. But in practice, according to reviews from those who applied, it is quite difficult to obtain them.

Banking institutions are cautious about issuing funds to everyone. This is due to the fact that if the borrower fails to repay the debt, the dispute will be resolved in the court of the country of which the borrower is a citizen.

Chinese banks will be more willing to issue loans to foreigners if they provide guarantees that 60% or more of the amount received will be used to purchase products or pay for services in China.

Registration of a mortgage

To apply for a real estate loan from a Chinese bank, a foreigner needs at least 12 months on the basis of a work visa and find a guarantor with Chinese citizenship (this can be an employer).

The package of official papers required to obtain a mortgage consists of:

• passports;
• residence permit (residence permit);
• labor contract;
• salary certificates from the place of work;
• copies of the license of the company that provides the applicant with a workplace;
• certificates for the last 12 months;
• a certificate confirming the applicant’s solvency;
• marriage/divorce certificate translated into Chinese.

Chinese banks are more favorable to those foreign borrowers who plan to purchase real estate in the locality in which they operate.

Offshores

Many owners of companies located on the Chinese mainland seek to open an offshore company in Hong Kong. The fact is that in this administrative region of China there is no need to pay income tax on business conducted outside its borders.

To open an offshore account, the company must have been in existence for more than 12 months and its capital must be at least $10 thousand. The bank will need to present a certificate confirming that the business owner has paid all taxes and mandatory fees. You will also need a letter confirming the solvency of the company from the banking institution where it is serviced.

Are there representative offices of foreign banks in China?

Back in 1985, the PRC passed a law according to which foreign banking institutions received the right to open their branches on the territory of the state.

A foreign bank wishing to establish a representative office in China must exist for at least 24 months. Moreover, the total amount of his assets cannot be less than $20 billion.

Foreign banks are represented quite widely in China. This is primarily due to the rapid development of international relations between the PRC and other countries of the world.

Banking institutions of the European Union countries

Many large European banks have branches in China. Representative offices of French, Dutch, Swiss, English, Belgian, and Italian banking institutions operate successfully here. Among the most famous are the branches of Credit Suisse First Boston (Switzerland), Deutsche Bank (Germany), Amsterdam-Rotterdam Bank, Algemene Bank Nederland (Netherlands).

Banks of CIS countries

As of 2019, only Russian banks in China opened their representative offices and branches. Thus, in 2008, a branch of VTB Bank opened in Shanghai. It services trade turnover between the Russian Federation and the People's Republic of China. In addition to it, there are 8 more VTB representative offices in China.

There is one representative office of Promsvyazbank in China. The purpose of its founding was to serve two Russian-owned companies - LOMO and Rostvertol. Representative offices and branches of the Central Bank of Russia, Gazprombank and Sberbank serve Chinese clients, but are not authorized to provide banking services to a wide range of citizens.

To summarize the above

China has an extensive banking system consisting of three levels. The idea that all banking institutions in this country are state-owned is erroneous. A large number of private commercial banks operate here. The main feature of the Chinese banking system is that the activities of all financial institutions are strictly controlled by the state.

Chinese banks provide services to foreigners. Thus, non-residents can open an account in a Chinese bank, receive an international money transfer, or take out a loan or mortgage. Foreigners working in China under an employment contract are entitled to receive a Chinese bank card. And not only in yuan, but also in foreign currency.

Chinese banks: Video

It is a common belief that all banks in China are state-owned. In fact, this is not true. Today, only three banks in China remain fully state-owned: Agricultural Development Bank of China, China Development Bank and Export-Import Bank of China. Most banks in the country are commercial and have joint stock ownership.

However, state control remains significant. This is primarily manifested in the activities of the People's Bank of China, the National Banking Regulatory Commission (CBRC) and the Ministry of Finance of the People's Republic of China. In addition, in the largest joint-stock banks the state owns a controlling stake.

One of the largest banks in China. It was founded in 1912 and is the oldest bank in the country. In 1949, after the formation of the People's Republic of China, the bank became an active participant in the international operations of the Chinese government. In 1994, Bank of China (BOC) received the status of a state-owned commercial bank. In 2006, the bank was transformed into a joint-stock company (LTD) - its shares appeared on the Hong Kong stock exchange.

Today the controlling stake belongs to the Chinese government.

In 1993, Bank of China opened a subsidiary bank in Russia - JSCB BANK OF CHINA (ELOS). Now there are several branches in the Russian Federation: the head office in Moscow, branches in Khabarovsk and Vladivostok. In 1993, a subsidiary, Bank of China in Kazakhstan, was also opened in Almaty.

This is the most international bank in China - it has about 550 representative offices in 27 countries.

Primary activity:

• Corporate and consumer lending
• Investment
• Insurance
• Currency exchange
• Bank card service

• Total assets (2011): 11.83 trillion yuan
• Net profit (2011): 130.319 billion yuan (2010 net profit after tax was 109.691 billion)
• Number of employees (2011): 289,951

It is also one of the largest banks in the country. Agricultural Bank of China (ABC) was founded in 1951.

At the end of the 70s, the bank became commercial, but was still entirely state-owned. On January 15, 2009, it was transformed into a joint stock limited liability company.

Primary activity:

• Investment
• Insurance
• Bank card service

• Total assets (2011): 11.67757 trillion yuan
• Net profit (2011): 121.956 billion yuan

One of the four largest banks in China. Was founded in 1954. In 2004, Construction Bank became a joint stock bank. In 2005, the bank conducted an IPO on the Hong Kong stock exchange. In 2005, Bank of America acquired a 9% stake in the bank for $3 billion.

Currently, Construction Bank is a member of the International ATM Alliance, a joint venture of several international banks, which allows clients of these banks to use each other's ATMs around the world without commission.

By the end of 2011, there were 13,581 bank branches in mainland China. CCB branches in Hong Kong, Singapore, Frankfurt, Johannesburg, Tokyo, Seoul, New York, Ho Chi Minh City and Sydney, representative offices are located in Moscow and Taipei. The bank has several subsidiaries: CCB Asia, CCB Financial Leasing, CCB International, CCB Trust, Sino-German Bausparkasse, CCB London, CCB Principal Asset Management and CCB Life.

In its investment program, the bank pays great attention to the healthcare sector and related industries, including the production of medical equipment, pharmaceuticals, medical institutes and services.

Primary activity:

• Corporate and retail lending
• Investment
• Insurance

• Total assets (2011): 12.282 trillion yuan
• Net profit (2011): 169.439 billion yuan

Western Union . Among them are Postal Savings Bank of China, Agricultural Bank of China, China Everbright Bank, Zhejiang Chouzhou Commercial Bank, Bank of Jilin, Harbin Bank, Fujian Haixia Bank, Yantai Bank, Longjiang Bank, Bank of Wenzhou, Huishang Bank, Shanghai Pudong Development Bank and China Construction Bank.

The Chinese banking sector has been an absolute world leader for more than five years. Moreover, in 2016, the total banking assets of the Celestial Empire exceeded the total capital of banks in the entire European Union combined. But many Europeans are still not familiar with the principles of its functioning.

Banking system of the country

The Chinese banking system is divided into three main levels:

1. First-rank banks include the People's Bank of China, which is the Central Bank of the People's Republic of China, and 3 political banks: China Development Bank, Agricultural Development Bank of China and China Exim Bank. The general function of level 1 is to control financial flows, manage development funds, and issue money.
2. The second rank is occupied by state financial and credit organizations, which are the most reliable. These include the Big Chinese Four.
3. The third rank is private organizations, with much lower profitability and own assets. This also includes post offices and small credit cooperatives.

"Big Four"

The four largest banks in China, called the “Big Four”:

• ICBC (Industrial and Commercial Bank of China);
• CCB (Construction Bank of China);
• The Agricultural Bank of China (Agricultural Bank of China);
• Bank of China (Bank of China).

They are the main banks in China in terms of assets. They occupy leading positions both in the country and throughout the world. Using their enormous financial capabilities, they increase capital by investing and issuing loans. They have branches and subsidiaries all over the world. Chinese banks in Russia are represented only by Bank of China. Its branch is the Bank of China (ELOS) network. In Russia, Elos does not have such high ratings because it is focused on securing trade deals for Chinese firms.

Foreign representative offices and branches

Some foreign branches are over thirty years old. The peak of their active development was the nineties and the beginning of the two thousandth, shortly after the country joined the World Trade Organization.

According to the China Banking Regulatory Commission, the number of representative offices grew fastest in the period from 2004 to 2007, when it reached 274. The same with the number of total assets and the volume of foreign capital in the Chinese banking sector in percentage terms. If in 2004 this figure was 1.8%, then by 2007 it was already 2.38%. To control competition in the industry, a number of strict restrictions and requirements have been introduced since 2008. This brought with it the expected slowdown in the pace of development. So in 2012, the assets of foreign branches in the economy returned to 1.82% of the total.

Now that the positions of national banks have already strengthened, the onset of a liberalization policy is predicted with the gradual lifting of restrictions for foreigners.

European banks in China

The European sector is widely represented in the country. Banks from France, the Netherlands, Switzerland, Italy, Belgium, England, and Germany are active. The most famous of them:

• ABN AMRO Bank N.V.;
• Standard Chartered PLC;
• Societe Generale S.A;
• Raiffeisen Bank International A.G.

Russian banks in China

Russia is represented by such banks as:

• Sberbank;
• Gazprombank;
• Promsvyaz;
• Central Bank of the Russian Federation.

However, despite the seemingly impressive list, Russian banks in China are not focused on the country’s domestic market, but are opened to service representative offices of Russian companies and trade turnover between countries. Many banks do not even have the license necessary to carry out banking operations. Others are content to merely carry out import and export obligations. Apart from Russia, no other CIS country in the region has opened its branches in China.

State and joint-stock banks

It became possible to open private banks only relatively recently. Before this, all banks were divided into state and joint-stock banks. Only the Big Four banks are classified as state-owned commercial banks. They are much less influential and account for a smaller percentage of the country's monetary transactions. There are over ten of them in total. Most often, the controlling stake in these financial and credit organizations is in the hands of the state.

Agricultural Bank

The founder of The Agricultural Bank of China was once Mao Zedong himself. Thus, it became the first bank founded after the Communist Party came to power.

• Year founded: 1951;
• Head office: Beijing;
• Heads of the Board: Zhang Yun, Xiang Junbo;
• Revenue: $29.12 billion;
• Assets: $2.58 billion.

China Construction Bank

China Construction Bank was originally established under the Ministry of Finance of China to distribute funds to funds responsible for infrastructure and construction. This was his only role until 1979. This year gradually begins to change towards commercialization.

It became a full-fledged commercial bank in 2004 along with the release of shares to the stock exchange.

• Year founded: 1954;
• Head office: Beijing;
• Heads of the Board: Wang Zuji, Tian Guoli;
• Revenue: $37 billion;
• Assets: $2.7 billion.

Industrial and Commercial Bank of China

Industrial & Commercial Bank of China is the leader of the Forbes ranking for six years in a row and the 3rd organization in the net profit ranking.

• Year founded: 1984;
• Head office: Beijing;
• Head of the Board: Yi Huiman;
• Capital: $308 billion;
• Revenue: $41.7 billion;
• Assets: $3.78 billion.

The company's leading position among all competitors best illustrates the power of the Chinese banking sector.

Basic banking services

The types of basic banking services in China do not differ from those common throughout the world. It's still:

• Consulting services;
• Financial flow management;
• Brokerage activities;
• Investments with issuers;
• Insurance.

Opening an account

The procedure for opening an account is as follows:

1. Preparation of a package of documents;
2. Filling out an application;
3. Select a bank card;
4. Connect mobile banking;
5. Receiving a USB key or flash drive, with the help of which it becomes possible to perform banking transactions regardless of location.

Required documents

The standard package of documents includes:

• International passport;
• Chinese M or Z visa;
• Registration form;
• Resident's TIN;
• Mobile number from a Chinese telecom operator.

International money transfer

The main instrument for transferring finances in China, as in most countries of the world, are companies with the Money Telegraphic Transfer method, which carry out express money transfers. Among them:

• Western Union;
• Contact;
• MoneyGram;
• Unistream;
• UnionPay.

Other possible options for receiving and sending money are a standard bank transfer or electronic currency transfer in systems such as:

• PayPal;
• Qiwi;
• WebMoney;
• Perfect Money;
• Payeer.

Western Union

Despite the fact that Western Union is the world's leading company in the field of money transfers and has representative offices in more than 200 countries around the globe, in China the use of the system has been severely limited in recent years. If at first there were no problems with transfers using WU and they were generally available in most banks, then after the introduction of a policy of strict control of foreign capital, the situation changed. Currently, you can send currency only at branches of PSBC and China Everbright Bank. Get it from the same two, plus ICBC. Financial giants such as Bank of China, The Agricultural Bank of China and China Construction Bank have abandoned servicing the WU network completely.

How to get a loan

In theory, any legal entity or individual, including citizens of other countries, can get a loan in China. In reality, the failure rate is very high. In order to give consent to issue a loan, the following is requested:

• direct guarantees of return;
• an ideal package of documents;
• evidence is desirable that most of the money will remain in the country and will be used to purchase goods and services within the country;
• It is desirable that the loan amount be calculated in millions of dollars, because the higher it is, the higher the chances of a positive decision on the loan.

How to get a mortgage

Mortgage loans are issued much more readily. Which doesn’t mean that you don’t need to meet a list of requirements to do this:

• correctly prepare the package of required documents;
• reside and be employed in the country for more than 12 months;
• find a resident willing to vouch for you;
• It is advisable that the city where you want to buy a home coincides with your place of work.

The percentage of positive decisions when issuing mortgage loans is higher than standard ones.

Offshore accounts in Hong Kong

Thanks to its autonomous position relative to the PRC, Hong Kong managed to become one of the largest offshore zones in the world. The opening of such accounts is often associated with financial manipulation and tax evasion. Business has flourished for a long time, but recently there has been a trend toward ever-increasing control over the flow of money. As part of the fight against tax evasion, it has recently become almost impossible to open an account in Hong Kong without possessing a Hong Kong Identification Card, an analogue of a passport that only Hong Kong residents and those who have received a residence permit in the state have.

This policy does an excellent job of reducing the number of low-level financial manipulations. Doing business and investing becomes slightly more difficult. So, it is not a problem to continue to buy a company with an already opened account or start your own. The restrictions work a little worse for larger fraudulent schemes. A common solution to the problem of opening an account is to establish a fictitious company in the name of a nominee director with Hong Kong registration.

Bottom line

Obtaining absolute leadership in the world in terms of exports, imports and production capacity of the Celestial Empire was not enough. With the right economic policy, China was able not only to briefly jump to first place in the world ranking of the banking industry, but also to gain a foothold there. To gain a foothold so securely that the advantage of Chinese banks over Western ones will only increase in the coming years. We expect ICBC to be in the first place of the richest companies in the world for the seventh time in a row. The leaders of the countries of the Old World can only admire these results and learn from experience in order to be able to maintain the given pace.

"International banking operations", 2012, N 1

The country, where an average of 6.5 dollar millionaires emerge every hour, is considered perhaps the most attractive market in the world, where many foreign banks would like to operate. But entering this market is fraught with difficulties due to various administrative barriers. How can a non-resident bank register its branch or subsidiary credit institution in China? How profitable is banking business in this country?

Opening up the Celestial Empire to the world

According to the PricewaterhouseCoopers forecast, by 2023, Chinese banks should overtake the United States in terms of domestic assets, and by 2050 they will account for almost 23% of all assets of the global banking industry. However, ten years ago, entry into this rapidly developing and rapidly growing rich market was very difficult for non-resident banks.

At the beginning of 2000, only 25 foreign banks with a license to transact in the yuan operated in China. At the same time, there were many restrictions on free competition between foreign and Chinese banks. First, operations for foreign banks were only allowed within the developed eastern regions of Shanghai, Beijing and Shenzhen. Secondly, these banks could only offer their services to foreign-owned enterprises and foreign nationals, including citizens of Hong Kong and Macau. Thirdly, the liabilities of foreign credit institutions in yuan could not exceed 35% of their liabilities in foreign currency, that is, the growth of transactions with the yuan had to be accompanied by a proportional increase in transactions in foreign currency. Fourth, all foreign banks were prohibited from accepting deposits from Chinese companies and individuals. Fifth, they were not allowed to subscribe for shares of blue-chip companies or trade in government bonds. In addition, a non-resident bank could then obtain a license to open a branch in China only five years after opening its representative office in this country. Moreover, the license obtained gave the foreign bank the right to open no more than one new branch per year.

How to open a bank in China

Only after China became a full member of the WTO on December 11, 2001, did the government of this country undertake a number of obligations, including opening the banking sector to foreign competitors in five years. It should be noted that the Chinese government fulfilled this obligation within the established deadline of December 11, 2006, although not in full. Restrictions on the activities of foreign banks still remain, although the opportunities for their subsidiaries to operate in China have expanded significantly. At the same time, the Celestial Empire in 2001 - 2006. opened to the outside world gradually: every year the Chinese opened 5-6 large cities to foreign banks. In addition, at the end of 2002, foreign banks received the right to engage in wholesale operations in foreign currency in China, and at the end of 2006 - retail operations in Chinese yuan.

The Regulations of the People's Republic of China on the regulation of the activities of banks with foreign capital (The Provisions of the People's Republic of China on the Administration of Foreign-Funded Banks), approved by the State Council of the People's Republic of China, came into force on December 11, 2006. At the same time, another regulatory act came into force - The Implementing Rules of the Provisions on the Administration of Foreign-Funded Banks issued by the China Banking Regulatory Commission (CBRC).

The fact is that in accordance with the Law of the People's Republic of China "On the People's Bank of China", the People's Bank of China is now entrusted with the functions of regulating money circulation and credit, while in accordance with the Decision "On the performance of regulatory and supervisory functions by the Banking Regulatory Commission of China instead of the People's Bank of China", adopted by the Standing Committee of the National People's Congress, the China Banking Regulatory Commission was established in April 2003. In accordance with the Banking Regulation and Supervision Law of the People's Republic of China, adopted in December 2003, the CBRC is responsible for regulating and supervising financial institutions that accept deposits, issue loans, clear accounts and carry out other activities in accordance with the Laws of the People's Republic of China." About commercial banking" and "About the company".

According to the Regulations of the People's Republic of China on the Regulation of the Activities of Banks with Foreign Capital, subsidiary banks with foreign capital received the right to carry out almost all transactions in yuan and all transactions in foreign currency if they are legal entities registered in the People's Republic of China, while branches and representative offices of foreign banks operating in The PRC, but not registered here as a legal entity, has restrictions on conducting a number of transactions. Thus, foreign banks (including branches and subsidiaries) are prohibited in the PRC from issuing financial bonds, acting as an agent when placing government bonds, or acting as an intermediary in accepting and disbursing funds in favor of third parties, including in favor of companies and government agencies .

According to the above provision, the minimum authorized capital for registering a subsidiary bank with foreign capital must be 1 billion yuan or the equivalent of this amount in freely convertible currency ($158.42 million - hereinafter at the cross rate calculated on the basis of official rates of the Bank of Russia on March 8 this year). By the way, a similar requirement is imposed for registering a Chinese bank. It should also be borne in mind that when calculating the minimum authorized capital, only the funds actually contributed are taken into account, and not promised or planned contributions.

In this case, the operating assets for each branch of a subsidiary bank must be at least 100 million yuan or equal to the equivalent of this amount in freely convertible currency ($15.84 million). At the same time, the operating assets of all branches must not exceed 60% of the total capital of a subsidiary bank, while foreign banks, when opening a branch in the PRC, must provide it as operating assets of at least 200 million yuan or the equivalent of this amount in freely convertible currency ($31.68 million).

Non-resident shareholders and major Chinese shareholders of a foreign-invested subsidiary bank can only be financial institutions. In this case, the owner of 100% or a controlling stake must meet the following requirements: firstly, it must be a commercial bank; secondly, it must have at least one representative office that has worked in China for at least two years; thirdly, the assets of this bank must be at least 10 billion US dollars based on the results of the previous year; fourthly, the level of capital adequacy of this bank must meet both the requirements of the country where it is resident and the requirements of the PRC. New shareholders of an already established subsidiary bank may be exempted by the Banking Regulatory Commission from the need to establish a representative office in China.

Note. The main shareholder of a subsidiary bank with foreign capital in China can only be a commercial bank.

The implementing rules of the Regulation on the Regulation of Banks with Foreign Capital define the procedure for registering a branch of a bank with foreign capital in the PRC and the procedure for converting a Chinese branch of a foreign bank into a subsidiary bank as follows. First, you must submit an initial application to the China Banking Regulatory Commission and obtain prior approval to open a bank. Secondly, write a second application to the CRDB for approval to open a bank after the initial application has been reviewed and approved by the relevant provincial branch of this commission. Thirdly, obtain a license (Finance Permit) to open a bank. Fourth, register the bank with the provincial department of industry and commerce.

The entire process of converting a Chinese branch of a foreign bank into a subsidiary bank may take at least 10 months, and opening a new subsidiary bank will require 15 months. If a foreign bank decides to maintain an existing branch in China in order to provide foreign currency banking services, then it will also need to deal with the distribution of existing assets between this branch and the subsidiary bank being created, which may require at least three months .

According to the Rules for the Implementation of the Regulation on the Regulation of Banks with Foreign Capital, a subsidiary bank that intends to obtain the right to engage in all types of RMB banking operations must apply for permission to do so from the CBDC, which will take at least seven months. First, the bank must obtain initial approval from the CBDC, prepare a business plan, and then the provincial branch of this commission conducts an assessment of its readiness for such operations, as a result of which a permit is issued.

A subsidiary bank with foreign capital receives the right to engage in all types of banking operations with the yuan, including accepting deposits from individuals and servicing bank cards. In addition, with the permission of the People's Bank of China, a subsidiary bank with foreign capital can engage in foreign exchange transactions, as well as sell foreign currency to clients. Branches of subsidiary banks with foreign capital can carry out all types of banking activities with the permission of the management of their bank, approved by the CBDC, while Chinese branches of foreign banks are not allowed to service bank cards, and they can only accept deposits from Chinese citizens in the amount of 1 million yuan and higher.

The PRC Regulation on the Regulation of Banks with Foreign Capital also establishes additional requirements for foreign banks wishing to conduct transactions in yuan. The CRBD issues permission for these operations only to those foreign banks that have already worked in China for at least three years and managed to earn a profit during the previous two years.

Quite high demands are placed on top managers of subsidiary banks with foreign capital and branches of foreign banks in China. According to the rules, nominations of senior level managers (including presidents, vice presidents, directors, chief executive officers, heads of operations control departments, heads of internal audit departments, etc.) must be approved by the Banking Regulatory Commission or (depending on position level) by its provincial branch. At the same time, the CRBD puts forward a requirement that top managers of banks be familiar with Chinese legislation and not be found to have violated it. In addition, candidates who have a bad credit history due to failure to pay large personal debts cannot apply for top manager positions. Future directors and top managers of banks, when approved for a new position, are required to make a statement that they have not been subject to criminal liability, have never refused to pay their debts, and have not violated Chinese laws or other regulations.

The work of foreign banks in modern China

Thanks to the gradual opening of the Chinese market to non-residents in the period from 2003 to 2007, the volume of assets of foreign banks and subsidiaries of banks with foreign capital operating in China increased from 416 to 1253 billion yuan. At the same time, the growth rate of assets of banks with foreign capital was higher than that of local ones, and therefore their share in the total volume of banking assets during this period increased from 1.50 to 2.36%.

But in 2008 - 2009. The growth of the foreign banking sector has slowed sharply. This is due to the fact that at the end of 2008, the Chinese government, in the context of the global crisis, announced a plan to stimulate the Chinese economy, within the framework of which cheap loans in the amount of 4 trillion yuan (633.7 billion US dollars) were allocated to the real sector through local banks. . As a result, the volume of loans issued by local banks increased sharply, while the funding of banks with foreign capital during this period deteriorated due to the crisis. 2009 turned out to be especially unsuccessful for the latter, when the volume of their assets increased by only 0.3%, while for all banks it increased by 26.3% (table).

Share of banks with foreign capital in the total assets of the Chinese banking system

Source: China Banking Regulatory Commission Report 2010

The situation improved in 2010, when the Chinese monetary authorities, fearing overheating of the economy, began to increase the refinancing rate and reduce the amount of liquidity provided to the banking sector. As a result, in 2010, the growth rate of assets of credit institutions with foreign capital was higher than that of all banks (29.1% compared to 20.8%).

Unfortunately, there were no official data for 2011 at the time when this material was being prepared. But according to a survey of 39 foreign banks and subsidiaries of banks with foreign capital conducted by PricewaterhouseCoopers, only two banks last year expected to make zero profit, six banks - profit below 20%, 22 banks - from 20 to 50%, three banks - from 50 up to 100% and three more banks - more than 100%.

At the beginning of 2011, there were 127 credit institutions with foreign capital operating in China, of which 40 were subsidiary banks with foreign capital. Moreover, according to the KRBD data, the last group of banks accounted for about 87% of all assets of foreign banks in this country. In addition, subsidiary banks with foreign capital had 223 branches in China, while foreign banks had only 90 branches.

Thus, for more successful business development in China, foreign banks should create their subsidiaries here. According to a PricewaterhouseCoopers survey last year, 11 foreign banks that registered as a legal entity in China said their expectations for obtaining this status were met, two banks believed that their expectations were not met, and seven banks were neutral about the event. At the same time, 12 surveyed banks predict the emergence of five new subsidiary banks with foreign capital in China by 2014, 13 respondents predict 10 or more subsidiary banks, and four survey participants believe that there will be no more of them.

Why don't Russian banks go to China?

The first and so far the only Russian bank to open its own branch in Shanghai at the beginning of 2008 was the VTB Group, whose Beijing representative office has been operating since 1989. The main task of the VTB Shanghai branch is to service Russian-Chinese trade turnover and foreign trade operations of Russian companies operating in China , and Chinese companies operating in Russia. As the bank's president Andrei Kostin said in an interview with Xinhua, despite the crisis, VTB has achieved significant success in China: “Through VTB, one of the largest contracts in the history of Russian-Chinese relations was concluded for $25 billion for the supply of Russian oil, We took part in the placement of shares of the large Russian company RUSAL in Hong Kong"<1>. VTB cooperates in China with such large companies as Rosneft and Transneft, and participated in financing the construction of nuclear energy facilities in China.

<1>http://russian.news.cn/economic/2010-09/23/c_13526556_2.htm.

VTB signed a memorandum of understanding with a number of leading financial institutions in China: Construction Bank of China, Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China and the national payment system China UnionPay Co. One of the important areas of cooperation between VTB and Chinese banks is the transition to national currencies in mutual settlements. Direct conversion of the two currencies contributes to the growth of trade turnover between China and Russia, and also gradually reduces the dependence of both countries on the US dollar.

Today, the Shanghai branch of VTB is the only Russian bank licensed to conduct banking operations in China. In November 2011, the branch received the status of a market maker to conduct transactions on the ruble/yuan pair on the Chinese Currency Exchange.

Even before the crisis, Russian banks such as Gazprombank and Promsvyazbank showed interest in the Chinese market and opened their representative offices here. But, except for VTB, not a single Russian bank has yet opened a branch in China.

Why are Russian banks in no hurry to enter the Chinese market? Firstly, this was partly prevented by the global crisis of 2008-2009. and the worsening of the debt crisis in the eurozone in 2011. Secondly, unlike American and European banks, which are more actively promoting their services in China, Russian banks operate in a rapidly developing market, and therefore have less incentive to enter a similar market. Thirdly, and this is perhaps the most important thing, administrative barriers hinder entry into the Chinese market.

For example, only foreign banks with assets of $20 billion or more can register their branches in China, while at the end of 2011 only the eight largest banks in the Russian Federation met this requirement. Even opening a regular representative office in China takes a lot of time: in particular, it took Promsvyazbank more than a year to do this. It is also impossible to buy a bank in China, because mainly large state-owned credit organizations operate here, which are not entirely transparent to non-residents and have a significant share of problem assets.

The fact that access to the Chinese market for foreign banks remains seriously difficult is stated in the White Paper published in 2011 by the American Chamber of Commerce in China. For example, American bankers are unhappy that the electronic payment market is practically closed to foreign participation, since the China UnionPay Co. payment system occupies a monopoly position here.

Another drawback that reduces the attractiveness of this market: in China, there are several agencies that regulate various aspects of the banking business, the requirements of which often contradict each other, which makes their implementation difficult. Therefore, in China it is not easy to bring complex banking products and services to the market, since this requires approval from several regulators at once. In addition, one must keep in mind that in China, the requirements of different regulators may be interpreted differently at the local level, and in some regions, some banking products are generally prohibited.

In accordance with the banking legislation of the PRC, subsidiary banks with foreign capital are allowed to create not only branches, but also branches. But so far, permits are only given for opening branches, the registration of which takes a lot of time. At the same time, the American White Paper states that in the PRC there is an unspoken rule according to which foreign banks are required to open one branch in undeveloped regions in exchange for a branch opened in developed regions.

The Prospect of the Yuan as a Global Currency

Big problems arise for foreign banks operating in China due to many restrictions associated with the conversion of the yuan. True, the Chinese authorities have already managed to do a lot in this direction. Thus, in June 2009, the People's Bank of China and the monetary authorities of Hong Kong signed a memorandum on the launch, from July 1, 2009, of a pilot project for the use of the Chinese yuan in cross-border settlements between Hong Kong and mainland China. According to this document, Hong Kong enterprises received the right to use the yuan in trade settlements with Chinese enterprises operating in cities such as Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan. Accordingly, Hong Kong banks can now provide services to businesses from these cities to accept deposits denominated in yuan, exchange currency and trade finance in Chinese currency.

Two years after the start of this experiment, the People's Bank of China announced that settlements in yuan in transnational trade were already being carried out with 144 countries. Additionally, in 2011, the People's Bank of China announced the launch of an experiment in transnational investment and financing in RMB. As a result, a decision was made to invest RMB in China for foreign enterprises. According to preliminary statistics, in 2011, the volume of cross-border payments in yuan amounted to 2.08 trillion, and direct investment in yuan - 110.9 billion.

At the II Forum of Global Consulting Companies, held in China in 2011, Chairman of the Council of the All-China Social Security Fund Dai Xianglong said that the share of the PRC economy is 10% of the world, and the share of foreign exchange reserves is one third, therefore China is the largest in the world creditor. According to Dai Xianglong, the transformation of the yuan into a world currency should take place in three stages. The first step, based on current account convertibility, is to transform the renminbi into a currency of account in international trade. The second stage is to expand interaction between Chinese and foreign investors and develop the yuan into an important global investment currency. The third stage is to achieve the internationalization of the yuan and turn it into an international reserve currency.

V.G.Bryukov

Independent Analyst