Four foreign banks have been given the go ahead to provide local currency services in China as it implements its commitment to the World Trade Organisation (WTO) to open up its financial markets.

The Chinese authorities said in February that UK-based HSBC, Citibank of the US, Hong Kong's Bank of East Asia and Japan's Mizuho Bank would be able to provide a range of services for local businesses at selected locations in China, including yuan loans and letter of credit (L/C) issuance for Chinese businesses.

Domestic service

The four banks will be able to provide yuan services for domestic enterprises in 13 designated cities, including Shanghai, Shenzhen and Dalian, as well as the eastern provinces of Jiangsu and Zhejiang.

When it began offering RMB services at the end of February, HSBC became the first foreign bank to do RMB business with domestic enterprises since China joined the WTO.

HSBC's yuan services include deposits, loans, bank billing, bonds, L/Cs, guarantees and settlements.

Liberalisation

China has agreed to open up its financial markets in all places and currencies to foreign competitors by 2006 under its WTO commitments.

Outstanding foreign-currency loans from foreign banks reached at least 13 per cent of the total of financial institutions in China last year, but foreign banks are thought to hold just 2 per cent or less of the country's combined banking assets.

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