China: China Banking New Measures For Opening Up

Last Updated: 9 August 2019
Article by Yi Wang

What is the development and the key highlights?

Banking, being a part of financial service industry, has now been fully opened to foreign investment. There is no foreign shareholding restriction on the banking sector. However, wholly foreign-owned banks, joint venture banks (the WFOE/JV Bank) and branches of foreign banks (collectively the FIE Bank(s)) are still subject to separate regulations. Only the banks with foreign shareholdings acquired through acquisition or share participation are regulated in the same way as domestic banks.

The table below lists the main requirements for FIE Banks, which may not apply to domestic banks. You will notice some inconsistency between the different regulations. The application of certain requirements can vary depending on the circumstances. Please contact us should be there anything you wish to discuss.

  Negative Lists1 FIE Banks Licensing Measures (2018 Edition)2 FIE Banks Regulations (2018 Draft Amendments)3
Is there any foreign shareholding restriction? No  No No
Who can be a foreign shareholder of a FIE Bank? N/A

Financial institution, but the only or controlling foreign shareholder must be a commercial bank whose:

  • total assets of the year prior to application are not less than (i) US$10 billion in case of setting up a WFOE/JV Bank or (ii) US$20 billion in case of opening a branch (US$6 billion for a HK and Macau bank);
  • equity adequacy ratio meets requirement of its home jurisdiction.
Same as required under the FIE Banks Licensing Measures, but no reference to the reduced threshold for HK and Macau bank shareholders
Is a foreign bank allowed to set up a branch and a subsidiary bank at the same time? N/A N/A Yes, but branches can only conduct wholesale business (for both RMB and foreign currency)
What is the minimum capital requirement for a FIE Bank? N/A

For a WFOE/JV Bank: N/A

For a branch: RMB200 million or forex equivalent allocated unconditionally from parent bank.

For a WFOE/JV Bank: RMB1 billion or forex equivalent

For a branch:

  • RMB200 million if the branch only conducts forex business; or
  • RMB300 million (RMB100 million + RMB200 million forex equivalent) if the branch conducts both RMB and forex business
Does a FIE Bank need to wait a year before applying for RMB licence? N/A Yes No, RMB licence and business opening approval can be applied at the same time.


  Guo Fa [2017] No. 574 Shanghai FTZ Financial Service Industry Guidance (2017 Edition)5 Shanghai FEI Banks Service Guideline (2019 Edition)6
Is there any foreign shareholding restriction? No No No
Who can be a foreign shareholder of a FIE Bank? N/A The only or controlling foreign shareholder of a WFOE/JV Bank and branch's parent bank must meet certain assets thresholds. Same as required under the FIE Banks Licensing Measures
Is a foreign bank allowed to set up a branch and a subsidiary bank at the same time?  N/A N/A N/A
What is the minimum capital requirement for a FIE Bank? N/A For a WFOE/JV Bank: N/A For a branch, operational fund allocated from parent bank must meet corresponding requirement. Same as required under the FIE Banks Licensing Measures
Does a FIE Bank need to wait a year before applying for RMB licence? 1-year waiting period requirement has been "temporarily suspended" from May 5, 2018 for FIE Banks located in a Free Trade Zone. N/A Yes


What does this mean for your business?

  • A foreign bank is now permitted to set up its controlled joint venture bank in China, if it has not set up a wholly-owned subsidiary bank;
  • A foreign bank is now permitted to hold a branch and a WFOE/JV Bank at the same time;
  • A foreign bank is now permitted to open a branch to conduct both forex and RMB business at the same time if and when the branch is opened in a Free Trade Zone;
  • The minimum capital requirement for setting up a WFOE/JV Bank tends to be reduced though in practice a higher capital injection is always welcomed;
  • The business allowed to be conducted by a WFOE/JV Banks is extended and essentially the same as domestic banks' business, but business allowed to be conducted by a foreign bank's branch is still subject to certain restrictions;
  • Certain business which previously required prior approval from CBIRC are now only subject to filing requirements;
  • Certain thresholds for operation funds and assets tests are potentially lower.


  1. Negative Lists includes (i) the Special Administrative Measures for Foreign Investment Access, (ii) the Special Administrative Measures for Foreign Investment Access to Pilot Free Trade Zones and (iii) the Special Administrative Measures for Foreign Investment Access to China (Shanghai) Pilot Free Trade Zone.
  2. Implementation Measures for the Administrative Licensing Items concerning Foreign-Funded Banks (2018 Revision) issued by CBIRC in February 2018
  3. Regulation on the Administration of Foreign-Funded Banks and its Detailed Rules for Implementation (Draft amendments published in November 2018)
  4. Decisions on Temporarily Adjustment of Relevant Administrative Rules, State Council's Circulars and Industrial Regulations Approved by the State Council in the Pilot Free Trade Zones made by the State Council on December 25, 2017
  5. Guidance on the Negative List for the Opening-up of the Financial Service Industry in China (Shanghai) Pilot Free Trade Zone (2017 Edition)
  6. Service Guideline on the Examination and Approval of the Establishment, Change and Termination of the Subsidiaries and Branches of Foreign-Funded Banks issued by Shanghai CBIRC in July 2019

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