In a vivid manifestation of the liberalization of China's banking sector since the country's entrance into the WTO in 2001, four foreign banks -- HSBC, Citigroup, Standard Chartered plc and Hong Kong's Bank of East Asia -- completed local incorporation in the country today. Now that they are incorporated, they are free to apply for the ability to offer yuan-based services and thereby gain access to China's $2 trillion in household savings. Citigroup CEO Charles Prince announced last week that Citigroup will almost double its branches in China to nearly 30. Citibank (China) plans to issue debit cards and underwrite domestic bond sales. Bank of East Asia plans to more than triple its current 27 branches by 2010 and forecasts mainland China operations will account for 35% of profit by then, up from the current 15%. HSBC Bank (China) Ltd., which has 48 billion yuan of outstanding loans and 64 billion yuan of deposits, will focus on premier banking (minimum requirement 500,000 yuan, or approximately $65,000) and asset management. Eight other foreign banks are in the process of incorporating in China, including JPMorgan, ABN Amro, and Hang Seng. Deutsche Bank and BNP Paribas plan to apply as well.
Sources: Bloomberg, Mercury News
Commentary: Citigroup CEO Outlines Planned Chinese Expansion • HSBC, Citigroup, Get Key Approval for Chinese Banking • The Inevitable Collapse of China's Banks
Stocks/ETFs to watch: HSBC Holdings plc (HBC), Citigroup Inc. (NYSE:C), Bank of East Asia Ltd. [ADR] (OTCPK:BKEAY), Standard Chartered plc [London: STAN]. ETFs: BLDRS Europe 100 ADR Index (NASDAQ:ADRU), PowerShares Intl Dividend Achievers (NYSEARCA:PID), First Trust Morningstar Div Leaders Idx (NYSEARCA:FDL), WisdomTree High-Yielding Equity (NYSEARCA:DHS), SPDR DJ Wilshire Large Cap (ELR)
Conference call transcript: Citigroup Q4 2006
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