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RETAIL BANKING | Tony Chua, China
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China seen to lift suspension of city banks’ expansion

The regulator to assess lenders' interregional expansion after more than 30 of them have expanded beyond their home provinces.

China's banking regulator may soon start the latest round of overall assessments of city commercial banks and subsequently issue quantitative criteria for their interregional expansion, China Business News reported on Tuesday, citing unnamed sources.

"Policies for [city commercial banks'] interregional expansion are still tight," a senior executive from a city lender was quoted as saying. "The regulator will conduct assessments of banks' interregional expansion and we expect it will quantize the criteria for capital, product, risk management, corporate governance and internal control based on the Basel III requirements."

City lenders' regional expansion is still suspended, the banker said.

An executive from a Henan province-based city lender said his bank had submitted its self-assessment report to the relevant regulatory departments and approval for those banks' interregional expansion will soon be resumed -- but with stricter criteria.

According to publicly available information, more than 30 of 147 city commercial banks have expanded beyond their home provinces. Those lenders include Bank of Dalian Co. Ltd., Bank of Shanghai Co. Ltd., Bank of Hangzhou Co. Ltd, Baoshang Bank Co. Ltd. and Shengjing Bank Co. Ltd.

"City lenders can better serve small and medium-sized enterprises (SMEs) as larger banks mainly focus on big and high-end customers," Yang Bin, president of Bank of Dalian's Shanghai branch, was quoted as saying in an earlier China Business News report. "In the U.S., around 97% are small lenders and society banks."

View the full story in Business China.

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