(Hong Kong) – HSBC Holdings has become the first foreign commercial bank to take a direct stake in a mainland Chinese bank.The UK-based bank, together with Honk Kong’s Shanghai Commercial Bank, has agreed to take an 11 percent stake in Bank of Shanghai.
HSBC has paid 517m yuan (£43.22m/US$62.6m) for an 8 percent stake while Shanghai Commercial Bank has taken a 3 percent stake at a cost of 194.2 yuan.
Foreign banks’ operations in China are restricted by regulations preventing them from opening accounts for the country’s 1.3 billion people or for Chinese firms as well as limiting how fast they can open new branches. These are, however, being relaxed as part of China’s responsibilities having joined the World Trade Organisation.
The Bank has about 200 branches in the city of Shanghai, although can’t do business currently beyond the city limits.