In China, Citigroup Encounters Hurdles to Retail-Banking Plans New Rules Could Delay Access To Coveted Mass Market; Foreign Firms Crowd In Installing ATMs at 7-Eleven
SHANGHAI -- Five years ago, China pledged to open its banking market to foreign competitors, and Citigroup Inc. didn't hesitate.
As Beijing dribbled out opportunities, the New York-based banking giant seized them. It set up units to lend foreign currencies, trade bonds and package derivatives. It began installing ATMs, and, through a partnership with a Shanghai bank, launched a credit card. Last year, it bid about $3 billion for a controlling stake in Guangdong Development Bank, which has 501 branches.
But Citigroup hasn't yet been allowed to reach out to ordinary retail customers in the world's most populous nation. Today, it operates just 13 branches in six Chinese cities. Its growing network of ATMs, including a new one at the Great Wall, so far exists to spit out cash mainly to foreign visitors and to publicize its brand.
LOCAL RULES
Foreign banks that intend to do consumer banking in China will be subjected to new rules, based on the country's 1995 Commercial Banks Law. A three-page draft notice distributed in August summarized the changes required:
? The bank must establish a China-incorporated entity to own branches. This ends branch ownership directly from overseas.
? The entity must have a minimum of 1 billion yuan in registered capital.
? Each branch must have 100 million yuan in capital.
? Of the total capital, 60% can be used in branches. (The basic capital funds six branches.)
? One branch can leverage the bank's global capital, rather than China capital.
? Branches must operate for three years and be profitable for two before obtaining a yuan consumer license.
? Branches in central, northeast and western cities need only two operating years and one profitable year.
? Exposure limit to a single customer is 10% of capital.
? Total loans are limited to 75% of total deposits.
? Books must be open to regulatory inspection.
? A minimum deposit of 1 million yuan is required for banks opting not to restructure.
Sources: China Banking Regulatory Commission, Beijing; WSJ ResearchAt the moment, neither Citigroup nor any other non-Chinese bank can take deposits from individuals or make them loans in China's currency, the yuan. Citigroup's own employees, in fact, have to be paid through accounts at Chinese banks. Citigroup's experience in China has involved clawing through a thicket of regulations and making compromises in the hopes of one day sharing in what may be the banking industry's biggest prize.
Next month, China is supposed to lift all remaining restrictions on foreign banks, fulfilling a promise that helped it gain membership in the World Trade Organization in 2001. But a raft of new rules passed on Wednesday by the State Council, China's highest administrative body, threatens to further delay access to ordinary Chinese customers, leaving some foreign bankers wondering how eager Beijing really is to give them the run of its coveted market.
"The intent was to open the sector to the maximum extent possible," says Charlene Barshefsky, the Clinton-era U.S. Trade Representative who helped negotiate the WTO agreement. Ms. Barshefsky, now a partner at Washington law firm Wilmer Cutler Pickering Hale & Dorr LLP, characterizes any new hurdles as "troubling" and "certainly not the intent of the agreement." She declines to discuss whether she is representing any U.S. banks in China.
China contends it is complying with the spirit of the agreement and is merely subjecting foreign banks to many of the same requirements Chinese banks face. The rules will "strengthen and improve the supervision and management of foreign banks and promote the stable operation of the banking sector," the State Council said in a statement Wednesday.
More than 70 foreign banks are vying for a piece of the Chinese market. For now, nearly all of them, including Bank of America Corp., have decided not to roll out their own brands for consumer banking in China. Instead, they are taking stakes in Chinese banks and may try to introduce their own products through them, or are sticking to niches like corporate banking or private banking for rich customers (see related article on page C10).
Citigroup is one of about 10 big foreign banks -- and the only American one -- with plans to go after Chinese retail customers under their own flags. Citigroup boasts of operations in about 100 nations, and consumer banking is a mainstay in many of those nations. Up for grabs in China, Citigroup estimates, is a "bankable" population of 300 million to 400 million of the nation's 1.3 billion people. Citigroup aims to target the emerging middle class and the new rich.
Charles Prince, Citigroup's chairman and chief executive officer, said earlier this year that it would be "almost criminal" not to position the bank for the long term in China. Chinese individuals have stashed roughly $2 trillion worth of yuan in the nation's commercial banks, according to China's central bank. That's equal to 70% of total consumer deposits at commercial banks in the U.S. "It may be...that 20 years from now, China will be the largest consumer market in the world," he said.
Citigroup, which currently employs about 3,000 in China, is called "Hua Qi," Chinese for American flag. U.K.-based HSBC Holdings PLC has also made Chinese retail banking a priority. Michael Smith, chief executive of HSBC's Hongkong & Shanghai Banking Corp. and chairman of its Hang Seng Bank Ltd. unit, characterizes the opening of the market as more like "an evolutionary step."
In HSBC's Shanghai offices, two dozen customer-relationship managers face monthly targets for sales of foreign-currency financial products such as mortgages and time deposits. The crown for "deposit king" recently went to an HSBC manager who brought in about $3 million of deposits, mortgages and other business in a month.
Foreign banks have long yearned for access to the China market. Many, including Citigroup's predecessor company, were active around Shanghai's famed riverfront Bund from the beginning of the 20th century, but pulled out after the Communist takeover in 1949.
After China adopted market reforms, regulators allowed Citigroup to open a south China office in 1983 and to return to Shanghai in 1985. But Citigroup and other foreign banks could neither take deposits from Chinese customers nor make loans to them. They couldn't do much aside from work with multinational companies expanding into China.
The landmark agreement for China to enter the World Trade Organization in 2001 was designed to change that. Ms. Barshefsky, who was President Clinton's lead negotiator on the matter, recalls that China was worried its weak domestic banks would be overrun by foreign ones. The agreement called for the market to open to foreign competition in stages so that China would have time to repair its banking system, which was burdened with bad loans.
China laid out a five-year timetable governing when and where foreign banks could begin taking on various categories of customers. Customers banking in foreign currency would come first, followed by Chinese companies doing business in yuan, then Chinese consumers with yuan. "Within five years after accession, foreign financial institutions will be permitted to provide services to all Chinese clients," read a short passage about banks in the 900-page WTO agreement.
In March 2002, three months after the WTO agreement took effect, Citigroup swung open the doors of a new branch in the landmark Peace Hotel on Shanghai's Bund. Four hundred customers were in line, the bank says. Citigroup became the first foreign bank to interact with Chinese consumers, taking their deposits in U.S. dollars and other foreign currencies.
Each WTO anniversary was expected to bring new expansion opportunities for foreign banks. But foreign bankers say that from the start, Chinese officials treated the dates as points at which foreigners could begin applying for the promised access. Actually getting the permission takes time, they say.
In 2002, Citigroup agreed to pay $67 million for a small stake in Shanghai Pudong Development Bank Co. The partners later released a co-branded Chinese credit card, a first in China. Citigroup has not disclosed details about how the card program is faring.
In 2003, Citigroup gained the right to do business, in yuan, with Chinese corporate customers. It built a desk to trade in Chinese government bonds and began to design yuan-denominated financial derivatives. It became a custodian for Chinese pension-fund money.
During this period, China worked to strengthen its own banks. In 2003, Liu Mingkang, an English-speaking former banker, was tapped to run the newly formed China Banking Regulatory Commission. The government sank $60 billion into China's three biggest banks, dramatically reducing nonperforming loans.
China had capped foreign ownership stakes in domestic banks at 25%. Nevertheless, one year ago, Citigroup challenged the limit with a $3 billion bid for 85% of Guangdong Development Bank, or GDB, which is owned by the Guangdong provincial government. If successful, the deal would allow Citigroup, along with its co-investors, to reshape a major Chinese bank with a nationwide license and assets of $48 billion.
Song Hai, a vice governor of Guangdong Province in charge of its economic portfolio, was eager to develop the region's financial-services industry and had welcomed investment by foreign companies. Mr. Song encouraged Citigroup to bid for outright control, according to another government official familiar with the situation. A former banker, Mr. Song is considered an economic reformer, and unlike most officials, is not a member of the Communist Party. A spokesman for Citigroup declined to comment on any aspect of the GDB bid, as did Mr. Song.
From the start, the bid was a long shot. China Construction Bank Corp. went public around the same time, and its stock had surged on the Hong Kong stock exchange. Some government officials complained that the stock's initial pricing had been too low, and that liberals in China's government were selling the jewels of the nation's financial system on the cheap to foreigners.
In late 2005, France's Société Générale AG made a competing bid for GDB, structured not to breach the 25% ownership cap. Confident that a deal would be announced by the Chinese New Year in January, Société Générale officials strung traditional red envelopes around their Paris office and bought Champagne, according to a banker in that office.
Senior government officials took an interest. In March, Premier Wen Jiabao said that "the state must have absolute controlling stakes" in state banks. Still, during a visit to China later that month, U.S. Sen. Charles Schumer heard "positive things" about Citigroup's bid when he met with its bankers and People's Bank of China Gov. Zhou Xiaochuan, who is considered a reformer.
But in mid-April, Chinese bank regulators sent a letter to Mr. Song's Guangdong government reiterating the 25% ownership cap. Citigroup scaled back its ambitions. Its current bid as part of a consortium would comply with the foreign ownership cap, although Citigroup still wants control of GDB's board of directors, people familiar with the matter say.
On Aug. 14, Citigroup and other foreign banks with designs on the Chinese market got a surprise: a three-page document outlining a new set of requirements to meet before they are allowed to take deposits in yuan from Chinese individuals. Among other things, the new rules call for foreign banks to incorporate their operations locally. The bankers conferred by conference call to figure out what the new requirements meant.
The following week, the foreign bankers met in Beijing with Wang Zhaoxing, deputy chairman of the bank regulatory commission. He explained in Mandarin that in addition to putting up $125 million in capital for the first six branches, each bank would need to establish a stand-alone holding company, incorporated in China with its own board of directors, much as Chinese banks are structured, according to attendees.
Mr. Wang outlined other requirements that foreign bankers contend will limit or delay their access to individual Chinese customers. Foreign bank branches, for example, will need to be open for three years -- and to be profitable for two years -- before authorities will let them take yuan deposits from individuals. Government officials have said the timetable is meant to protect Chinese depositors until a deposit-insurance program can be established.
Citigroup says the most important facet of its push into China is to build its own retail-banking operation. That priority would become even more critical if its GDB bid fails or its effort to boost its 4% stake in Pudong Development Bank falls short.
Anand Selvakesari, who is in charge of Citigroup's retail-banking operations in China, plays a key role in that effort. Among other things, the 39-year-old veteran of the bank's business in India is in charge of finding locations for branches and hiring managers to run them.
"We have to get new customers," says Mr. Selvakesari, who arrived in Shanghai in April. ATMs are one strategy. Electronic banking is already popular in China, but Citigroup cannot yet issue its own ATM cards in the country. Visitors and others with foreign bank cards can use its machines to withdraw yuan. Citigroup collects fees for such usage.
It regards the machines as a form of advertising, an alternative to billboards, and has installed them in 7-Eleven convenience stores, in airports and in a hotel at the portion of the Great Wall closest to Beijing. "Our objective is to create awareness," Mr. Selvakesari explains. By year's end, Citigroup intends to have 85 machines in place, and it has made separate arrangements to give its customers access to thousands of local-bank ATMs. Eventually, it hopes to use its network to service Chinese retail customers.
Citigroup used a similar tactic in India, where foreign branch banking is also highly restricted. It now has hundreds of ATMs spread over 30 cities there.
For now, Citigroup is reaching out to China's wealthy by marketing fancy deposit products tied to stocks and commodities which it already has permission to sell, such as an investment account linked to the stock performance of five retailers. Mr. Selvakesari targeted affluent customers in Singapore with similar products in the mid-1990s. He says they offer customers higher returns than basic Chinese savings accounts do, and they underscore Citigroup's global reach.
Mr. Selvakesari says he wants to get wealthy people buzzing about Citigroup. He arranges for prospective customers to test drive Ferraris and Range Rovers. His team has invited prospects to "micromarketing events" such as presentations on feng shui, wine appreciation, health and economics.
花旗在华遭遇“五年之痒”
五年前,中国承诺将向外资开放国内银行市场,花旗集团(Citigroup Inc.)毫不犹豫地抓住了这一机会。
它在华先后设立了发放外汇贷款以及从事债券和一揽子衍生金融产品交易的子公司。花旗开始在中国一些城市安装自己的自动提款机,并与上海一家银行合作推出了信用卡。去年,它出价约30亿美元竞购广东发展银行(Guangdong Development Bank)的控股权,该行拥有501家分支机构。
但花旗一直未获准接触中国这一世界人口最多国家的居民储户。目前花旗只在中国的6个城市拥有13家分支机构。该行在中国的自动提款机数量虽然不断增多,最近刚刚又在长城安装了一台,但它们目前的作用只限于向海外游客提供现金并向中国人宣传花旗的品牌。
中国相关法规
希望在中国从事消费者银行业务的外资银行将遵守新的管理条例,该条例是在1995年商业银行法(Commercial Banks Law)的基础上制定的。以下是今年8月份发布的该条例的征求意见稿:
?在华外资银行必须注册为国内法人银行,才能获准全面经营人民币零售业务
?法人银行注册资本必须达到10亿元人民币。
?下设分行营运资金必须达到1亿元人民币。
?对外资银行所有境内分行累计拨付的营运资金总额不得超过注册资本的60%。
?外资银行分行经营人民币业务,需满足“开业三年、连续两年盈利”的条件。
?在中国中部、西部和东北地区经营的外资银行分行只需满足“开业两年、实现一年盈利”的条件。
?对单一客户的贷款不能超过银行贷款余额的10%。
?外资银行的贷款余额与存款余额的比例不能超过75%。
?银行帐目须向监管机构开放,以供审查。
目前,花旗以及任何其他非中资银行都不能向中国的居民储户吸收人民币存款,也不能向他们发放人民币贷款。事实上,花旗向自己的中国员工发放薪资还需通过在中资银行开立的帐户。花旗在中国的经历就像是在一个由各种监管法规构成的灌木丛中迂回穿行,它梦想的只是有朝一日能参与分享这一银行业最丰盛的美餐。
下个月,为了履行2001年加入世界贸易组织(WTO)时的承诺,中国应取消目前所有针对外资银行的限制。但中国最高行政机构国务院上周三通过的一系列新法规却有可能延缓外资银行接触中国居民储户的进度,这使得一些外国银行家不禁对中国政府是否真打算向外资开放国内银行市场心生疑窦。
曾在克林顿执政时期任美国贸易谈判代表的沙琳?巴尔舍夫斯基(Charlene Barshefsky)说,当初与中国达成“入世”协议意在使中国尽可能大地开放国内银行市场。曾经参与中国“入世”谈判的巴尔舍夫斯基目前是华盛顿一家律师事务所Wilmer Cutler Pickering Hale & Dorr LLP的合伙人。她将中国在这方面新设置的任何障碍都称之为“找麻烦”,并说它们显然不符合中国“入世”协议的本意。巴尔舍夫斯基拒绝谈论她是否代表某些美国银行的在华利益。
中国则声称,它遵守了“入世”协议的精神,现在只不过是要求外资银行遵守许多适用于中资银行的法规罢了。国务院在周三的声明中称,新颁布的法规旨在“加强和完善对外资银行的监督管理,促进银行业稳健运行。”
目前有70多家外资银行正在竞相涉足中国市场。包括美国银行(Bank of America Corp.)在内,它们几乎都选择了不以自有品牌在华推出个人银行业务。它们或是收购中资银行的股份,然后通过这些银行推出自己的产品;或是满足于在企业银行和面向富裕阶层的私人银行服务等细分市场开展业务。
而花旗则是10家左右计划以自有品牌与中国居民储户打交道的外资大银行之一,也是其中唯一的一家美国银行。花旗自称在约100个国家有自己的业务,而消费者银行则是它在许多国家的主要银行业务。花旗估计,中国13亿人口中有3亿至4亿人“具备开户条件”,这部分人有可能成为它的客户。花旗将中国新兴的中产阶层和富裕人群定为了自己的目标客户。
花旗集团的董事长兼首席执行长查尔斯?普林斯(Charles Prince)今年早些时候表示,花旗在中国不作长远打算“几乎是一种犯罪”。中国央行提供的数据显示,中国的居民储蓄存款余额目前约合2万亿美元,这些钱现在都存在中资银行。这一数额相当于美国各商业银行中居民储蓄存款余额的70%。普林斯说,20年后中国或许将成为世界最大的消费市场。
花旗目前在中国约有3,000名员工,其中文名称是华语中对美国国旗的称呼。总部位于英国的汇丰控股(HSBC Holdings PLC)也将在中国开展个人银行业务当作了工作重点。该公司旗下汇丰银行(Hongkong & Shanghai Banking Corp.)的首席执行长邵铭高(Michael Smith)将中国银行市场的开放形容为一个渐进的过程。邵铭高还是汇丰控股旗下恒生银行(Hang Seng Bank Ltd.)的董事长。
在汇丰的上海办事处,二十多个客户关系经理在发放外币按揭贷款和吸收外币定期存款等外汇金融业务上每月都需完成一定的目标额。最近一位荣膺该行“存款之王”称号的经理在一个月内做成了约300万美元的业务。
外资银行一直渴望进入中国市场。包括花旗的前身公司在内的许多外资银行1949年以前一直活跃在上海滩。
中国实行改革开放以后,政府监管机构1983时允许花旗在中国南方开设了一家办事处,并于1985年允许该行重返上海。但花旗和其他外资银行既不能向中国居民吸收存款也不能向他们发放贷款。除了与在华经营的跨国公司开展业务外,这些银行在中国几乎没有多少拓展业务的余地。
中国于2001年签署的“入世”协议意在改变这一局面。时任克林顿政府首席谈判代表的巴尔舍夫斯基回忆说,中国当时担心国内脆弱的银行业会被外国竞争对手压垮。“入世”协议规定中国可逐步向外资开放国内银行市场,以便中国能够有时间整顿其坏帐累累的国内银行体系。
中国为最终向外资开放全部金融业务制定了一个五年过渡期。最先开放的是面向中国居民的外汇业务,其次是面向中国企业的人民币业务,最终将开放面向中国居民的人民币业务。长达900页的中国“入世”议定书中一段关于银行的内容写道:“入世五年后,外资金融机构将获准向所有中国客户提供服务。”
在中国“入世”协定生效三个月后的2002年3月,花旗集团在上海外滩的地标性建筑和平饭店新开了一家分支机构。该行称,当时前来开户的400多名客户排成了长长的队伍。以开始吸收中国居民的美元和其他外币存款为标志,花旗成了首个与中国居民储户直接打交道的外资银行。
中国加入WTO每满一年,外资银行就会迎来新的扩张机遇。但外资银行表示中国官员从一开始就把满一年的日子当作允许外资申请从事某种业务的申请日期。而从申请到真正获准开展业务还需要一定的时间。
2002年,花旗同意斥资6,700万美元参股上海浦东发展银行(Shanghai Pudong Development Bank Co.)。双方随后推出了一款联名信用卡,这在中国还属首次。花旗并未透露信用卡合作项目现况如何。
花旗在2003年获准为中国的企业客户开展人民币业务。花旗还设立了一个交易中国国债的柜台,并着手设计以人民币计价的金融衍生品。花旗还成为中国社保基金境外投资的托管人。
在此期间,中国一直致力于提高银行业的实力。2003年,刘明康出任新组建的中国银监会(China Banking Regulatory Commission)主席。中国政府从外汇储备中拿出了600亿美元为中国最大的三家银行注资,从而明显地降低了这三家银行的不良贷款比率。
中国的规定限制外资银行在中资银行中的参股上限比例为25%。但在一年前,花旗提议希望以30亿美元收购广东发展银行的股份,目前广东发展银行的控股股东是广东省政府。这笔交易如顺利完成,花旗及其他的合伙投资者将让一家拥有全国营业许可、总资产达到480亿美元的中国大型银行面目焕然一新。
广东省主抓经济的副省长宋海急切希望发展广东省的金融服务产业并欢迎外商来广东投资。据另一位知情的政府官员透露,宋海鼓励花旗竞标广东发展银行的全部股份。宋海以前曾在银行担任过要职,他被视为是一个经济改革家,与大多数政府官员不同的是,他并不是党员。花旗的发言人拒绝对竞标广东发展银行的前景发表评论,宋海也拒绝发表相关评论。
花旗竞购广东发展银行的股份一事从一开始就充满了争议。中国建设银行(China Construction Bank Corp.)的股票大约也在这个时候在香港挂牌上市,并且大幅飙升。一些政府官员抱怨说,该股的发行价定得太低,政府内的自由派正在向外国人贱卖国有金融体系的珠宝。
法国的兴业银行(Societe Generale AG)在2005年年底时加入了对广东发展银行的竞购,该行承诺不会突破25%的外资持股比例上限。据法国兴业银行巴黎总部的一位银行家说,由于确信它将在2006年1月中国农历新年前达成收购广东发展银行的协议,兴业银行已经在其巴黎总部挂起了中国传统的大红包,并且买了香槟酒准备庆祝。
中国政府高级官员对这一收购案也表示了关注。中国总理温家宝今年3月时说“政府对(国有银行)必须有绝对控股权”。但在当月底访问中国的美国参议员查尔斯?舒默(Charles Schumer)却从中国央行行长周小川等人口中听到了有关花旗竞购广东发展银行的“好消息”。周小川被认为是改革派。
但到了今年4月中旬,中国的银行监管机构却致信广东省政府,重申25%的外资持股上限必须坚持。花旗也将自己的雄心收敛了一些。据知情人士说,花旗所牵头财团目前拟竞购的广东发展银行股份不会突破政府规定的外资持股上限,不过花旗集团仍希望控制广东发展银行的董事会。
花旗和其他打算涉足中国市场的其他外资银行8月14日得到了一条令人吃惊的消息:在获准从中国居民手中吸收人民币存款之前,它们还需满足一系列新的规定。其中一条规定是外资银行必须在中国注册登记。银行家们纷纷召开电话会议来探讨这些新规定究竟意味着什么。
接下来的一周,外国银行家们在北京会晤了中国银监会副主席王兆星。据参加会晤的人士转述,王用中文解释说,除了要为在华设立的首批6个分支机构准备好1.25亿美元资本金外,拟进军中国市场的外资银行还必须在中国注册成立一家独立的控股公司,就想中资银行一样,该公司必须有自己的董事会。
王兆星还列出了其他一些要求,外资银行争辩说,这些要求将限制或推迟它们面向中国居民推出人民币存贷款业务。比如,政府现在规定,外资银行在中国的分支机构只有在华经营满三年、且两年以上盈利,政府才会允许其从居民手中吸收人民币存款。中国政府官员称,这一时间安排是为了在中国建立存款保险制度前保护中国储户的利益。
花旗称,其进军中国市场的最重要步骤就说在华建立自有品牌的零售银行业务。如果竞购广东发展银行的交易失败,或者其拟将自己在浦东发展银行的持股比例进一步提高的努力未能成功,推出这一业务的紧迫性将会增强。
负责花旗在华零售银行业务的石安南(Anand Selvakesari)在这方面扮演着重要角色。这位在花旗在印度的子公司服务了多年的银行家目前正负责为花旗在华各分支机构寻找落脚点,并负责招募掌管这些业务的经理人员。
今年4月抵达上海的石安南说:“我们必须获得新客户。”增加自动提款机的数量是战略之一。虽然电子银行业务在中国已经普及,但花旗仍未获准在中国发行自己的金融卡。海外游客及其他拥有外国银行卡的人可在花旗的自动提款机上提取人民币,不过需向花旗缴纳服务费。
花旗将这些自动提款机看作是可替代广告牌的广告载体,目前它已在一些7-Eleven便利店、机场和靠近北京长城的一家酒店安装了自己的自动提款机。石安南解释说:“我们的目标就是创造知名度。”花旗计划在年底前安装85台自动提款机,它还达成了使自己的客户得以使用成千上万台中资银行自动提款机的协议。花旗希望最终能够建成一个服务于中国普通居民的自动提款机网。
花旗当年在印度使用的就是这一策略,印度对外资银行开设分支机构也有很多限制。花旗目前在印度的30多个城市设有数百台自动提款机。
目前,花旗正通过营销一系列个人理财产品来接触中国的富人客户。石安南上世纪90年代中期在新加坡就针对富人客户推出了类似产品。他说这些产品可以为中国客户带来高于存款利息的收益,它们彰显了花旗在全球所具有的实力。
石安南说,他希望中国的富人们能围着花旗转。他安排有希望成为该行客户的人试驾法拉力(Ferraris)和路虎(Range Rovers)轿车。他手下的营销团队还邀请潜在客户参与风水讲座等“重大营销活动”。
James T. Areddy