Banking News
- HSBC ventures into China's rural market
Date: 14-Dec-2007 Sources: (Xinhua Online)
SUIZHOU, Hubei, Dec. 13 (Xinhua) -- A rural bank established by the Hong Kong and Shanghai Banking Corporation Limited (HSBC) opened for business on Thursday, marking the first entry by an overseas bank into a rural area of China.
The HSBC rural bank in the Cengdu District of Suizhou City in central China's Hubei Province offers deposit service for local businesses and individuals, and helps businesses raise funds.
With a staff of 22 and an initial capital of 10 million yuan (about 1.36 million U.S. dollars), the bank, a wholly-owned subsidiary of HSBC, will also provide trade financing and settlement services for export-oriented rural enterprises.
Peter Wong, Chairman of the Board of HSBC Rural Bank, said that he expected the bank to reach a balance of income and expense within the next three years. He said the bank attached importance to 'accumulating the experience of running a rural bank and cultivating a rural financial pattern applicable across China.'
Local government sources said that the HSBC rural operation would be granted the same treatment as other local rural financial institutions, including a three-year income tax holiday and lower sales tax rates.
Analysts said this rural foothold would give its parent, HSBC, extra leverage in the Chinese market as the country's rural-urban deposit gap was closing rapidly.
The per capita banking deposit for Chinese urban residents was 89.8 yuan (about 12 U.S. dollars) in 1978, nearly 13 times as much as that for farmers. By the end of 2005, the disparity had been narrowed to 5.28 times, with the urban per capita deposit at 20,715 yuan and that for farmers at 3,301 yuan, according to the National Development and Reform Commission (NDRC), the country's top economic planner.
Overall, Chinese citizens had deposited an aggregate 17.5 trillion yuan with all financial institutions by the end of March, central bank figures showed.
If all went smoothly, HSBC said, it would expand its services to include agriculture-related loans to individual farmers later in 2008.
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