Foreign Banks in China: Steady Growth

PBoC’s 2013 annual report shows that foreign banks in China showed steady growth and even outpaced GDP growth in terms of new deposits, but still lag their domestic competitiors.

Total amount of deposits, which includes corporate current and fixed deposits, personal deposits and NCDs grew at 11% last year (see chart). However, the market share is still negligible: 4.49% for corporate deposits and 0.49% for personal deposits. Since 2007, when first foreign banks received approval to set up local branches, 42 have done so. However, growth was inhibited by binding regulations and onerous reporting requirements. From the onset, the regulators were determined to let local banks to develop capabilities by slowing down sophisticated foreign competition.