ICBC to open FTZ branch

The Industrial and Commercial Bank of China (ICBC) will open its first branch in the Shanghai Free Trade Zone (FTZ), information portal aastock.com reported Sunday, the first move made by domestic banks before the FTZ opening on October 1.

The ICBC was not immediately available to confirm this news with the Global Times by press time.

The current ICBC Waigaoqiao Bonded Area (Waigaoqiao) sub-branch in Pudong district is reportedly to be upgraded as the Shanghai Free Trade Zone branch upon the official opening of the zone.

It is not yet clear whether the branch will be at the same rank with the Shanghai branch, or an overseas branch like those in Hong Kong, New York and London.

"Whether it is a domestic branch or overseas branch depends on the bank's decision and the Shanghai FTZ policies," said Zhao Xijun, a finance researcher at Renmin University of China.

The bank's website showed that presently there are 31 branches across the country. The branches are located in municipalities and capital cities of provinces, overseeing the operation of lower level local sub-branches and outlets.

Local media reported on Sunday that the Shanghai FTZ branch will function as an overseas branch, led by the bank's head office and be independent from its domestic transaction system. However, none of this was confirmed by the bank.

The Shanghai FTZ will pilot a series of trials such as adapting market interest rate and free currency exchange policies, and supporting offshore banking, according to the guidelines outlined by the Shanghai municipal government. Banks in this zone are permitted to provide offshore banking, cross-border transactions and financing services to their clients.

"In essence, (the financial service in the FTZ) is offshore finance," Bai Tian, a senior analyst at RoundStone Finance Academy, said in an interview with the Global Times Sunday. He noted that domestic banks will benefit from the free foreign exchange policy and can also expand their international business, as financial institutions will play by international rules.

ICBC's rivals have also been filing documents to set up branches in the FTZ.

Shanghai Securities News reported Wednesday that Bank of China had applied to upgrade its Yangshan and Waigaoqiao sub-branches to branches in the zone, while Bank of Communications will choose one of three local sub-branches to be its FTZ branch.

Foreign banks such as HSBC and Standard Chartered Bank are reportedly also interested in setting up branches in the Shanghai FTZ. South China Morning Post reported recently regulations on interest rates and business licenses will be relaxed in the zone.