The China Banking Regulatory Commission (CBRC) has said that it will continue encouraging foreign banks to set up branches in China.
However, in a review published last week, the commission failed to shed any light on further relaxation of the acquisition regulations, or its justification for Chinese consumers' Rmb1 million ($129,000) threshold to access foreign banks' branches.
The announcement jars slightly with the CBRC's rule that only high-net-worth individuals with at least Rmb1 million can have their deposits accepted by foreign banks. This rule does not look set to change.
It is thought that the Chinese regulators are concerned that any issue would mean the consumer having to sue an off-shore bank at some point in the future, likely to be a traumatic experience. Consequently, they have priced out most of the country's consumers.
One Hong Kong based argued: "It's not transparent at all. The nub is whether Chinese consumers are better protected by a bank that's a branch or a legal entity."
The document also fails to mention whether the current 19.9% cap on stakes of mainland banks owned by single foreign investors will change. Last year the cap forced Citigroup to reduce the scale of its purchase in Guangdong Development Bank, and instead team up with local partners for the deal.
Andrew McGinty of Lovells does not expect this to change in a hurry either. "Like everything in China, it will have to bed down before it changes. Firstly, they will have to get comfortable with a number of shareholders having a controlling stake, and only then, if there are tangible benefits, will they look at it," he said.
However, despite these drawbacks, the banking sector is one the few industries that has truly opened up in accordance with World Trade Organisation standards. "There has been genuine opening up, and they should be given credit for that," said McGinty.