Russian banks in China. Foreign banks in China: the problem of market entry and development
The Bank of Russia has completed creating conditions for placing Russian debt in yuan. This means that Russia will be able to raise money in Asia, thereby compensating for the lack of access to Western capital markets due to sanctions.
In Moscow, on March 22, a yuan settlement center will be opened at ICBC Bank, the founder of which is the largest Chinese commercial bank ICBC. He entered into a special agreement with the People's Bank of China, becoming its authorized bank in Russia.
Deputy Chairman of the Bank of Russia Dmitry Skobelkin and First Deputy Chairman of the People's Bank of China Yi Gan spoke about this at the opening in Beijing of the first foreign representative office of the Bank of Russia in modern history.
China is our main trading partner, and the opening of a clearing center will, on the one hand, spur the activity of Chinese business in Russia, and on the other hand, it will become a channel for the entry of yuan liquidity into the country, which, in particular, will be used by Chinese investors to purchase federal loan bonds (OFZ) issued in Chinese currency.
Moscow's ICBC will become the first Chinese bank represented in the Russian Federation that will be able to take into account securities - its license will allow investors from Beijing to directly buy OFZs in yuan.
The Russian Ministry of Finance has been talking about plans for the debut “Chinese” bond issue in the equivalent of a billion dollars since 2015. The goal is to test the infrastructure and provide a benchmark for the cost of Russian risk in Asian markets. After this, Russian companies will also be able to issue bonds in yuan, attracting cheaper financing than in Russia.
The demand of Chinese investors for Russian securities is guaranteed. The last time the Ministry of Finance issued Eurobonds at 3.99 percent, while ruble federal loan bonds are trading at 8-8.5 percent. The yield on OFZs in yuan will lie somewhere in the middle, while now Chinese securities generate income at the level of 2.6-2.7 percent. The competitiveness of Russian bonds is obvious.
However, China is struggling with capital outflows, so Chinese investors need permission to buy securities abroad. The Chinese leadership has already stated that it supports the purchase of Russian bonds in principle, but has yet to agree on specific investment quotas.
In addition, as Dmitry Skobelkin told Rossiyskaya Gazeta, Russia and China are completing preparations for concluding a memorandum on exchange trading in gold. According to him, the People's Bank of China, which has the world's largest gold and foreign exchange reserves, has confirmed its interest in Russian supplies. Last year, our gold was certified at the Shanghai Exchange.
Now the parties are agreeing on the details of the memorandum, and in parallel, the mechanism for its implementation is being worked out, noted the Deputy Chairman of the Central Bank.
For China, the opened representative office of the Bank of Russia became the eighth one created by foreign central banks. The representative office should contribute to the development of cooperation between Russia and China in the financial sector, which has recently been rapidly gaining momentum. It will help increase payments in national currencies (now more than 80 percent of them are made in dollars), and protect the interests of Russian banks and non-credit organizations in the Chinese market.
There are already 8 representative offices of Russian banks and one branch operating in China, 64 Russian banks have correspondent accounts in Chinese banks.
"Mir" and UnionPay will begin issuing joint cards in April - June
By the time state employees and pensioners begin to be transferred to cards of the Mir payment system, Russian banks will have mastered the issuance of joint Mir-UnionPay cards.
The first such cards will appear in the second quarter of 2017, Alla Bakina, director of the National Payment System Department of the Bank of Russia, told Rossiyskaya Gazeta.
The problem of using Mir cards abroad has been solved through co-badging programs with international payment systems.
"Mir" - Maestro and "Mir" - JCB cards have already been issued, agreements have been signed on the issue of co-branding cards "Mir" - AmEx and "Mir" - UnionPay. In Russia they will work according to the rules of the Mir payment system, and abroad - according to the rules of international payment systems.
The user will be spared the need to carry two cards with him - international and national, having a card with one number and one PIN code, noted Alla Bakina.
The issue of Mir has exceeded three million, and plans are to issue more than 20 million national payment cards by the end of the year. “We provided favorable tariffs to banks so that they would be interested in developing a national payment card,” said Sergei Radchenkov, commercial director of NSPK, operator of the Mir payment system.
Igor ZUBKOV
You can view the infographic for the article.
In the PRC there are 5 largest state banks in terms of assets, which are called the Big Five, the first 4 of them are state-owned banks:- ICBC- Industrial & Commercial Bank of China (Industrial and Commercial Bank of China);
- ABC- Agricultural Bank of China (Agricultural Bank)
- BOC- Bank of China (Bank of China).
- CCB- China Construction Bank - (Construction Bank of the People's Republic of China).
- BoCom- Bank of Communication (Bank of Communications of the People's Republic of China).
The top 12 largest banks in China also include the following commercial banks:
- Merchant's Bank- Trade Bank;
- Citic Bank- Citik Bank;
- Shanghai Pudong Development Bank- Pudong Development Bank;
- Industrial Bank- Industrial Bank of China;
- People's Bank of China(MinSheng) - People's Bank of China;
- China Everbright Bank(Guangda) - Bank of Guanda;
- Ping An Bank- Ping'an Bank.
Banking institutions, taking advantage of their significant financial capabilities, are engaged in investing and lending to the population, which increases their capital.
These banks have branches and subsidiaries in many foreign countries. In Russia, only the Bank of China operates, whose branch is the Bank of China, ELOS (中国银行俄罗斯分行). The activities of the ELOS branch are concentrated on conducting trade transactions of Chinese enterprises, so in Russia few ordinary citizens know about it.
Representative offices of foreign banks and their branches in China
Almost all the largest banks in the world have their representative offices in China, some of which have been open for more than 100 years, the largest of which can be noted:- HSBC - open since 1865
- Standard Chartered Bank since 1858.
- BEA - Bank of east Asia since 1920
- Citibank since 1902.
- DBS Singapore - since 1995.
- Hang Seng Bank - since 2007
- OCBC - since 1927.
- Bank of America - since 1981.
According to information from the China Banking Regulatory Commission, in 2004-2007 the number of representative offices increased especially rapidly, which in those years amounted to 274 institutions. The same was observed in the total volume of assets and foreign capital in the Chinese banking sector in accordance with the percentage ratio: in 2004, this figure was 1.8%, and three years later - 2.38%.
The Chinese government has developed strict requirements, prohibitions and restrictions in order to control competition in the industry. As a result, there was a slowdown in the pace of development, which, however, was expected. In 2012, the assets of foreign branches in the economy again reached 1.82% of the total. At the moment, after strengthening the positions of national financial institutions, experts assume that a liberalization policy will come into play, when prohibitions and restrictions for representatives of foreign countries will be gradually lifted.
European banks in China
There are also many European banks operating in China, for example from Germany, Italy, Belgium or France. The most famous and largest of them include the following:- ABN AMRO Bank N.V.;
- Standard Chartered PLC;
- Societe Generale S.A;
- Raiffeisen Bank International A.G.
Some of the Russian banks do not have the license required to conduct banking operations. There are also some financial institutions of the Russian Federation that carry out operations on financial export and import obligations.
Banks from other CIS countries have not opened their branches in China.
State banks of China
The Chinese government only recently allowed the opening of private banking organizations. Before this, banks were divided into two categories – joint-stock and state-owned.
State commercial banks include only those institutions that are classified as members of the Big Four. They are not so influential and provide a low percentage of China's financial transactions. There are about 10 of them in total. Usually the PRC state is the owner of a controlling stake.
ABC/Agricultural Bank of China
Mao Zedong became the founder of the Agricultural Bank of China. This is the first financial institution that was founded after the communist parties came to power.The bank was founded in 1951 and is headquartered in Beijing. Revenue is approximately $30 billion, the volume of assets is $2.5 billion. The heads of the bank's board are Zhang Yun and Xiang Junbo.
Construction bank / Construction Bank of China
This institution was founded under the Ministry of Finance of China, its purpose is to distribute finances to those funds that are responsible for construction and infrastructure. Until 1979, this was the sole purpose of China Construction Bank. However, in 2004, with the release of shares to the stock exchange, it became a commercial bank.The financial institution was founded in 1954 and is headquartered in Beijing. The revenue is $37 billion, the volume of assets is $2.7 billion. The heads of the bank's board are Wang Zuji and Tian Guoli.
ICBC / Industrial and Commercial Bank of China
Industrial & Commercial Bank of China has occupied a leading position in the Forbs rating for 6 years in a row, as well as 3rd place in the rating of banks in terms of net profit and first place in terms of assets.The bank was founded in 1954 and is headquartered in Beijing. The institution's capital is $308 billion, revenue is $42 billion, and assets are $4 billion.
Thus, the company occupies a leading position and thereby proves the fact that the Chinese banking sector is at an unusually high level.
It is a common belief that all banks in China are state-owned. In fact, this is not true. Today, only three banks in China remain fully state-owned: Agricultural Development Bank of China, China Development Bank and Export-Import Bank of China. Most banks in the country are commercial and have joint stock ownership.
However, state control remains significant. This is primarily manifested in the activities of the People's Bank of China, the National Banking Regulatory Commission (CBRC) and the Ministry of Finance of the People's Republic of China. In addition, in the largest joint-stock banks the state owns a controlling stake.
One of the largest banks in China. It was founded in 1912 and is the oldest bank in the country. In 1949, after the formation of the People's Republic of China, the bank became an active participant in the international operations of the Chinese government. In 1994, Bank of China (BOC) received the status of a state-owned commercial bank. In 2006, the bank was transformed into a joint-stock company (LTD) - its shares appeared on the Hong Kong stock exchange.
Today the controlling stake belongs to the Chinese government.
In 1993, Bank of China opened a subsidiary bank in Russia - JSCB BANK OF CHINA (ELOS). Now there are several branches in the Russian Federation: the head office in Moscow, branches in Khabarovsk and Vladivostok. In 1993, a subsidiary, Bank of China in Kazakhstan, was also opened in Almaty.
This is the most international bank in China - it has about 550 representative offices in 27 countries.
Main activities:
- Corporate and consumer lending
- Investment
- Insurance
- Currency exchange
- Bank card service
- Total assets (2011): 11.83 trillion yuan
- Net profit (2011): 130.319 billion yuan (2010 net profit after tax was 109.691 billion)
- Number of employees (2011): 289,951
It is also one of the largest banks in the country. Agricultural Bank of China (ABC) was founded in 1951.
At the end of the 70s, the bank became commercial, but was still entirely state-owned. On January 15, 2009, it was transformed into a joint stock limited liability company.
Main activities:
- Investment
- Insurance
- Bank card service
- Total assets (2011): 11.67757 trillion yuan
- Net profit (2011): 121.956 billion yuan
One of the four largest banks in China. Was founded in 1954. In 2004, Construction Bank became a joint stock bank. In 2005, the bank conducted an IPO on the Hong Kong stock exchange. In 2005, Bank of America acquired a 9% stake in the bank for $3 billion.
Currently, Construction Bank is a member of the International ATM Alliance, a joint venture of several international banks, which allows clients of these banks to use each other's ATMs around the world without commission.
By the end of 2011, there were 13,581 bank branches in mainland China. CCB branches in Hong Kong, Singapore, Frankfurt, Johannesburg, Tokyo, Seoul, New York, Ho Chi Minh City and Sydney, representative offices are located in Moscow and Taipei. The bank has several subsidiaries: CCB Asia, CCB Financial Leasing, CCB International, CCB Trust, Sino-German Bausparkasse, CCB London, CCB Principal Asset Management and CCB Life.
In its investment program, the bank pays great attention to the healthcare sector and related industries, including the production of medical equipment, pharmaceuticals, medical institutes and services.
Main activities:
- Corporate and retail lending
- Investment
- Insurance
- Total assets (2011): 12.282 trillion yuan
- Net profit (2011): 169.439 billion yuan
Western Union . Among them are Postal Savings Bank of China, Agricultural Bank of China, China Everbright Bank, Zhejiang Chouzhou Commercial Bank, Bank of Jilin, Harbin Bank, Fujian Haixia Bank, Yantai Bank, Longjiang Bank, Bank of Wenzhou, Huishang Bank, Shanghai Pudong Development Bank and China Construction Bank.
The Chinese banking sector has been an absolute world leader for more than five years. Moreover, in 2016, the total banking assets of the Celestial Empire exceeded the total capital of banks in the entire European Union combined. But many Europeans are still not familiar with the principles of its functioning.
Banking system of the country
The Chinese banking system is divided into three main levels:
- First-rank banks include the People's Bank of China, which is the Central Bank of the People's Republic of China, and 3 political banks: China Development Bank, Agricultural Development Bank of China and China Exim Bank. The general function of level 1 is to control financial flows, manage development funds, and issue money.
- The second rank is occupied by state financial and credit organizations, which are the most reliable. These include the Big Chinese Four.
- The third rank is private organizations, with much lower profitability and own assets. This also includes post offices and small credit cooperatives.
"Big Four"
The four largest banks in China, called the “Big Four”:
- ICBC (Industrial and Commercial Bank of China);
- CCB (Construction Bank of China);
- The Agricultural Bank of China (Agricultural Bank of China);
- Bank of China (Bank of China).
They are the main banks in China in terms of assets. They occupy leading positions both in the country and throughout the world. Using their enormous financial capabilities, they increase capital by investing and issuing loans. They have branches and subsidiaries all over the world. Chinese banks in Russia are represented only by Bank of China. Its branch is the Bank of China (ELOS) network. In Russia, Elos does not have such high ratings because it is focused on securing trade deals for Chinese firms.
Foreign representative offices and branches
Some foreign branches are over thirty years old. The peak of their active development was the nineties and the beginning of the two thousandth, shortly after the country joined the World Trade Organization.
According to the China Banking Regulatory Commission, the number of representative offices grew fastest in the period from 2004 to 2007, when it reached 274. The same with the number of total assets and the volume of foreign capital in the Chinese banking sector in percentage terms. If in 2004 this figure was 1.8%, then by 2007 it was already 2.38%. To control competition in the industry, a number of strict restrictions and requirements have been introduced since 2008. This brought with it the expected slowdown in the pace of development. So in 2012, the assets of foreign branches in the economy returned to 1.82% of the total.
Now that the positions of national banks have already strengthened, the onset of a liberalization policy is predicted with the gradual lifting of restrictions for foreigners.
European banks in China
The European sector is widely represented in the country. Banks from France, the Netherlands, Switzerland, Italy, Belgium, England, and Germany are active. The most famous of them:
- ABN AMRO Bank N.V.;
- Standard Chartered PLC;
- Societe Generale S.A;
- Raiffeisen Bank International A.G.
Russian banks in China
Russia is represented by such banks as:
- Sberbank;
- Gazprombank;
- Promsvyaz;
- Central Bank of the Russian Federation.
However, despite the seemingly impressive list, Russian banks in China are not focused on the country’s domestic market, but are opened to service representative offices of Russian companies and trade turnover between countries. Many banks do not even have the license necessary to carry out banking operations. Others are content to merely carry out import and export obligations. Apart from Russia, no other CIS country in the region has opened its branches in China.
State and joint-stock banks
It became possible to open private banks only relatively recently. Before this, all banks were divided into state and joint-stock banks. Only the Big Four banks are classified as state-owned commercial banks. They are much less influential and account for a smaller percentage of the country's monetary transactions. There are over ten of them in total. Most often, the controlling stake in these financial and credit organizations is in the hands of the state.
Agricultural Bank
The founder of The Agricultural Bank of China was once Mao Zedong himself. Thus, it became the first bank founded after the Communist Party came to power.
- Year founded: 1951;
- Head office: Beijing;
- Heads of the Board: Zhang Yun, Xiang Junbo;
- Revenue: $29.12 billion;
- Assets: $2.58 billion.
China Construction Bank
China Construction Bank was originally established under the Ministry of Finance of China to distribute funds to funds responsible for infrastructure and construction. This was his only role until 1979. This year it gradually begins to change towards commercialization.
It became a full-fledged commercial bank in 2004 along with the release of shares to the stock exchange.
- Year founded: 1954;
- Head office: Beijing;
- Heads of the Board: Wang Zuji, Tian Guoli;
- Revenue: $37 billion;
- Assets: $2.7 billion.
Industrial and Commercial Bank of China
Industrial & Commercial Bank of China is the leader of the Forbes ranking for six years in a row and the 3rd organization in the net profit ranking.
- Year founded: 1984;
- Head office: Beijing;
- Head of the Board: Yi Huiman;
- Capital: $308 billion;
- Revenue: $41.7 billion;
- Assets: $3.78 billion.
The company's leading position among all competitors best illustrates the power of the Chinese banking sector.
Basic banking services
The types of basic banking services in China do not differ from those common throughout the world. It's still:
- Consulting services;
- Financial flow management;
- Brokerage activities;
- Investments with issuers;
- Insurance.
Opening an account
The procedure for opening an account is as follows:
- Preparation of a package of documents;
- Filling out an application;
- Select a bank card;
- Connect mobile banking;
- Receiving a USB key or flash drive, with the help of which it becomes possible to perform banking transactions regardless of location.
Required documents
The standard package of documents includes:
- International passport;
- Chinese M or Z visa;
- Registration form;
- Resident's TIN;
- Mobile number from a Chinese telecom operator.
International money transfer
The main instrument for transferring finances in China, as in most countries of the world, are companies with the Money Telegraphic Transfer method, which carry out express money transfers. Among them:
- Western Union;
- Contact;
- MoneyGram;
- Unistream;
- UnionPay.
Other possible options for receiving and sending money are a standard bank transfer or electronic currency transfer in systems such as:
- PayPal;
- Qiwi;
- WebMoney;
- Perfect Money;
- Payeer.
Western Union
Despite the fact that Western Union is the world's leading company in the field of money transfers and has representative offices in more than 200 countries around the globe, in China the use of the system has been severely limited in recent years. If at first there were no problems with transfers using WU and they were generally available in most banks, then after the introduction of a policy of strict control of foreign capital, the situation changed. Currently, you can send currency only at branches of PSBC and China Everbright Bank. Get it from the same two, plus ICBC. Financial giants such as Bank of China, The Agricultural Bank of China and China Construction Bank have abandoned servicing the WU network completely.
How to get a loan
In theory, any legal entity or individual, including citizens of other countries, can get a loan in China. In reality, the failure rate is very high. In order to give consent to issue a loan, the following is requested:
- direct guarantees of return;
- an ideal package of documents;
- evidence is desirable that most of the money will remain in the country and will be used to purchase goods and services within the country;
- It is desirable that the loan amount be calculated in millions of dollars, because the higher it is, the higher the chances of a positive decision on the loan.
How to get a mortgage
Mortgage loans are issued much more readily. Which doesn’t mean that you don’t need to meet a list of requirements to do this:
- correctly prepare the package of required documents;
- reside and be employed in the country for more than 12 months;
- find a resident willing to vouch for you;
- It is advisable that the city where you want to buy a home coincides with your place of work.
The percentage of positive decisions when issuing mortgage loans is higher than standard ones.
Offshore accounts in Hong Kong
Thanks to its autonomous position relative to the PRC, Hong Kong managed to become one of the largest offshore zones in the world. The opening of such accounts is often associated with financial manipulation and tax evasion. Business has flourished for a long time, but recently there has been a trend toward ever-increasing control over the flow of money. As part of the fight against tax evasion, it has recently become almost impossible to open an account in Hong Kong without possessing a Hong Kong Identification Card, an analogue of a passport that only Hong Kong residents and those who have received a residence permit in the state have.
This policy does an excellent job of reducing the number of low-level financial manipulations. Doing business and investing becomes slightly more difficult. So, it is not a problem to continue to buy a company with an already opened account or start your own. The restrictions work a little worse for larger fraudulent schemes. A common solution to the problem of opening an account is to establish a fictitious company in the name of a nominee director with Hong Kong registration.
Bottom line
Obtaining absolute leadership in the world in terms of exports, imports and production capacity of the Celestial Empire was not enough. With the right economic policy, China was able not only to briefly jump to first place in the world ranking of the banking industry, but also to gain a foothold there. To gain a foothold so securely that the advantage of Chinese banks over Western ones will only increase in the coming years. We expect ICBC to be in the first place of the richest companies in the world for the seventh time in a row. The leaders of the countries of the Old World can only admire these results and learn from experience in order to be able to maintain the given pace.
Foreign banks and their branches are active in China. Traditionally, they play a prominent role in the Chinese banking system. In the early years of the People's Republic of China, only four branches of foreign banks located in Shanghai were granted legal status, allowing them to maintain an almost symbolic presence in the country.
The history of the formation of the modern structure of foreign financial institutions in China can be divided into three stages.
The first stage was marked by the registration of a Japanese commercial bank in Beijing - Japan Import and Export Bank in 1979. It was from this moment that foreign banks were allowed to establish representative offices in special economic zones. However, bank representative offices could only engage in market research, consulting, economic analysis, assistance in establishing contacts with Chinese authorities, manufacturers and consumers, but not in banking activities.
To further regulate the banking market in a sustainable manner, the Chinese government issued the “Regulations on the Administration of Foreign Funding for Banks and Sino-Foreign Joint Banking Ventures in Special Economic Zones” in 1985 (CBRC, 1985). These rules allow foreign banks to open branches and conduct foreign currency transactions in five special economic zones, namely Shenzhen, Zhuhai, Shantou, Xiamen, and Hainan. Due to strict geographic and client restrictions, foreign banks had to establish representative offices to gather information and identify possible investment prospects in China. The Chinese government has gradually lifted geographic restrictions, allowing foreign banks to have a presence in coastal cities outside special economic zones.
As the presence of foreign banks expanded, the second phase (1994-2001) of banking reforms in China was marked. Foreign banks founded by Hong Kong, Japan, the United States, the Netherlands, Germany, France and Thailand entered the Chinese market in the early 1990s. These developments went along with the growth of foreign investment. For the first time, China has given foreign banks access to the yuan for business purposes. Shenzhen has been selected as a special economic zone for foreign banks to conduct transactions in Chinese national currency (Renminbi). In addition, foreign banks based in Shanghai and Shenzhen have been allowed to conduct RMB transactions in the neighboring provinces of Jiangsu, Zhejiang, Guangdong, Guangxi, and Hunan since 1999. Even despite the financial crisis of 1997-98, foreign capital was attracted by the establishment of 15 new foreign banking institutions in China between 1998 and 2001 (CBRC, 2007).
Accession to the WTO and the subsequent liberal policy of opening up the banking sector to the world marked the third stage (from 2002 to the present) of the development of foreign banks in China. Foreign banks in Shanghai, Shenzhen, Tianjin and Dalian were allowed to conduct business transactions in Chinese domestic currency. Geographically, the foreign banking sector in China expanded to Guangzhou, Zhuhai, Qingdao, Nanjing and Wuhan in 2002, and then to Jinan, Fuzhou, Chengdu and Chongqing in 2003.
In 2004, five more cities - Kunming, Beijing, Xiamen, Shenyang and Xi'an - allowed foreign banks to conduct business transactions. Thus, every year there were more and more cities open to foreign banking. By December 2006, foreign banks were allowed to participate in the provision of certain financial services, including special regulations previously available only to domestic commercial banks. In particular, they began to be listed on a par with Chinese banks in annual banking statistics. The remaining restrictions on market access for foreign banks, which regulate strict requirements regarding ownership, operations and legal forms, have been lifted by the Chinese Banking Regulatory Commission. Since 2007, foreign banking in China has entered a new stage where all geographical and client restrictions for foreign banks have been eliminated. Previously, foreign banks were only allowed to provide services to corporate clients with deposits of more than 1 million yuan. WTO accession opened up the Chinese banking sector to foreign investors, stimulating the emergence of new foreign banking operations in China.
In order to enter the Chinese banking market, a foreign bank needs to register a subsidiary company in China on a shared basis (locally incorporated banks), or create a Chinese company completely controlled by foreign capital (wholly foreign-owned enterprise (WHOE)). Depending on this, as well as on the place of registration of the new bank, the possibilities of providing various banking services, conducting operations on the market, regulatory features, etc. differ.
The national aspect of foreign financial institutions in China is also very important, since its financial activities in the country depend on which country the bank represents in the arena of market services in China. For example, countries such as Hong Kong, the USA, and Japan are more focused on investment projects, while European countries register their representative offices for the convenience of doing business for their national corporations.
Foreign banks in China have their headquarters in more than 47 countries and regions, most of them from Hong Kong, the United States and Japan, which accounted for about 47 percent of the total foreign banking institutions in China in 2006. Cultural and geographical proximity may have contributed to the emergence of branches of banks from Singapore, South Korea, Japan and Hong Kong in China.
Foreign banks in these countries may have followed their investors into China. Although most developed countries have established trade or investment ties with China, the investment and trading companies of these countries are distant from China. Therefore, most likely, it is more profitable and reliable for partner countries to carry out transactions through their national banks.
Foreign banking institutions are highly concentrated in certain Chinese cities. Shanghai and Beijing are the most favorable locations due to various geographic advantages, such as the strategic nature of the banking market, information externalities, and proximity to the central bank. Also, foreign financial institutions are located in Shenzhen and Guangzhou, followed by Xiamen, Tianjin, Dalian, Qingdao and Suzhou. Foreign banks are also targeting some inland cities, including Xi'an, Chengdu, Chongqing, Kunming, as old-established industrial centers (Figure 4).
The territorial structure of representative offices, branches and branches of foreign banks is different. Representative offices, whose task is to collect information and search for business prospects, are largely concentrated in Beijing, Shanghai and Guangzhou. Foreign banks can benefit from information externalities by locating close to the People's Bank of China. A large number of foreign banks are established in areas where enterprises with foreign investment are concentrated. Thus, the share of foreign banks operating in the Shanghai area is 43% of the total assets of foreign banks in China, 45% of loans and 40% of foreign currency deposits. Foreign banking institutions and subsidiaries involved in domestic and foreign currency transactions are scattered along developed coastal cities. Since the beginning of the opening-up period, the Yangtze River Delta has become a favorite region for foreign banks. Thus, foreign banks located in Shanghai serve both a huge stretch of the coastal zone and more remote areas adjacent to the river.
As for the regional differentiation of subsidiaries of foreign companies, for clarity, a map of “Regional differentiation of foreign banks in China” was constructed (Fig. 5). The data used were selected from 42 national banks of countries with the greatest influence and distribution in China. In particular, many of these locally incorporated banks have the right to transact in Chinese national currency. As can be seen, it is quite difficult to determine the trend of regional differentiation, since the founding countries are not particularly concentrated in any region of the world. However, it is worth noting the strong influence on China's banking sector from its southeastern neighbors, namely Japan, Taiwan, Hong Kong, Singapore and, more recently, Malaysia. Also among the important participants in the Chinese banking sector are Western Europe, especially the UK, which owns the two largest foreign banks in China, as well as France, Switzerland, and Germany. The USA remains the largest in terms of the number of representative offices of its banks in China (5 banks). The largest number of employees employed in foreign banks of its parent country is Great Britain - 12,760 (at the end of 2013).