PwC: Footing in China for Foreign Banks

By Rob Starr, Content Manager, Big4.com

The seventh PwC Foreign Banks in China survey report reveals that China’s 181 foreign banks more than doubled profits to RMB 16.73 billion in 2011 from RMB 7.78 billion in 2010. Mervyn Jacob, PwC Financial Services Leader for China and Hong Kong comments:

“China’s foreign banks have performed strongly despite barriers such as lending caps and the relatively slow pace of new branch approvals. Not only are their profits and total assets on the rise, they hold a significant market share in major markets such as Shanghai (12% in 2011). While all this is well and good, there shouldn’t be any room for complacency,” he said.

As in past years, the strict regulatory environment continues to be a major concern to the 41 foreign banks surveyed. On the respondents’ wish list of key regulatory restrictions that they would like to see relaxed – bond underwriting, access to the derivatives market and wealth management market, a higher quota of offshore funding, CNAPS membership and equal treatment on QDII. On a surprising note, the participants surveyed consider the China Banking Regulatory Commission (CBRC) a more supportive regulator than even their own home regulators.

Like most industries, talent remains a major challenge for foreign banks. So much so, more than half of the survey respondents believe talent shortage would have a ‘significant’ or ‘very significant’ impact on their top line growth. Despite this, many foreign banks are on an aggressive recruitment drive, aiming to increase the industry’s headcount by 56% to 55,000 by 2015.