Larger FTZ to free banks and benefit firms
Print Edition
THE expansion of Shanghai’s free trade zone will allow banks to open outlets and conduct cross-border services more freely, while the number of companies to benefit from easier financial rules is seen to rise nearly fivefold, regulator and bank officials said.
Domestic banks don’t need to apply for approval to open or upgrade outlets already in their annual plan in the extended free trade zone, the Shanghai branch of China Banking Regulatory Commission said in a statement yesterday.
Banking headquarters capable of offering offshore services can authorize their branches in the expanded Shanghai FTZ to conduct offshore services, the statement added.
The appointment of senior bank managers below the level of branch heads will also be easier as banks only need to report after the appointment is made instead of filing for approval in advance, the statement said.
The number of companies that could benefit from easier cross-border financial rules could rise from 12,000 to 57,000, the Bank of China said yesterday.
“The expansion of Shanghai free trade zone could lower funding costs, facilitate currency conversion and money management for companies,” said Zhou Hehua, deputy general manager of BOC Shanghai branch. “The move could help boost the real economy because of lower borrowing costs across a large scale.”
BOC said it has agreed with 12 companies, including Zhangjiang Hi-Tech Park Development Co, Shanghai Zhenhua Heavy Industries Co, and SAIC-GMAC Automotive Finance Co, in the extended area to open free trade accounts and offer a combined 2.7 billion yuan (US$434 million) in offshore loans, whose interest rate can be 1 percentage point lower than onshore lending.
The loans will be granted once the government confirms the list of companies registered in the extended zone, the bank said.
BOC’s comments came after the Shanghai FTZ officially quadrupled in size yesterday. Covering an area of 120.72 square kilometers, the zone now comprises the Lujiazui financial hub, the Jinqiao manufacturing zone, the Zhangjiang High-Tech Park and the initial bonded areas of Waigaoqiao, Yangshan and Pudong Airport.
As of last Wednesday, 17 banks have been allowed to open free trade accounts for clients, with 12,466 accounts opened by foreign entities and companies in the free trade zone, official data showed.
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