Shenzhen WFOE Company Registration Service
Hotline: 86-755-82143348, Email:amyhuang@citilinkia.com
ATAHK reads from China Daily that the Industrial and Commercial Bank of China Ltd has been granted a branch license to operate in the United Kingdom, the Prudential Regulatory Authority, the British financial services regulator, which is part of the Bank of England, said on Tuesday. For details, please refer to the following news from China Daily on September 11th:
"We can confirm that ICBC has been authorized to operate in the United Kingdom as a wholesale-only branch," a Bank of England spokesperson said.
Prior to the announcement, ICBC was operating in the UK as a subsidiary, and had stricter capital requirements than those for a branch. With the new branch license, ICBC will now enjoy greater lending and financing capacity in the UK.
The issue of Chinese banks wanting to set up branches first emerged in 2012 when a group of Chinese banks expressed frustration over regulatory issues in a letter that was sent by the Association of Foreign Banks to the UK Treasury.
Their main complaint concerned the UK regulator's refusal to let them open branches, which would have had lending and financing capacity proportional to the parent company's balance sheet.
Subsidiaries, in contrast, are subject to the strict capital requirements that apply to local banks in the UK. Hence, in most cases, the lending and financing capacity is proportional to the balance sheet of the subsidiary itself.
The concerns expressed by the Chinese lenders caught the attention of the British government, and were aided by support from the City of London.
Last year, the Bank of England said foreign banks would be allowed to apply for a branch license, although only for wholesale business. Retail business still needed to be conducted under a subsidiary license, in order to protect individual depositors.
"The pressure came from the Chinese banks, and that's perfectly proper. Without pressure from the Chinese banks, it may not get looked at," Mark Boleat, the chairman of the policy and resources committee of the City of London Corp, told China Daily in a previous interview.
Before ICBC's branch license, Bank of China Co Ltd was the only Chinese bank to have a branch license in London, as its license was awarded before the regulations were tightened.
Currently, Bank of China, ICBC and China Construction Bank Corp all have their European headquarters in Luxembourg, where they operate as branches. The vibrant business generated by the Chinese lenders in Luxembourg has partly contributed to pressure on the British government to allow Chinese banks to open branches.
Michelle Chen, a partner at the London-headquartered law firm Squire Sanders, said the announcement shows that the UK government is opening the doors for Chinese banks to expand in the London financial center.
"The significance is not just for ICBC. I believe more Chinese banks will be granted branch licenses in the UK over time," said Chen.
She said the granting of a branch license to ICBC and potentially other Chinese banks in the future also reflects also financing demand from Chinese companies as they expand internationally. "As branches, Chinese banks would be in a better position to serve the financing needs of Chinese companies that expand overseas."
Chen said that another significance of ICBC now having a branch license is that Chinese banks are increasingly learning how to operate in a global environment, satisfying UK laws and regulations while providing a diverse range of products to customers.
She said the granting of the branch license to ICBC and potentially other banks in the future supports the process of yuan globalization in London, following the appointment of China Construction Bank as London's yuan clearing bank earlier this year.
Contact us
If you are interested in Chinese economy or trading and new policies between China and foreign countries, you can rely on ATAHK to do varieties kinds of trading and grab the new policy news. You are welcome to contact ATAHK anytime, simply by calling us at 86-755-82143422 or visit www.3737580.net.