China’s efforts to encourage foreign banks to open branches in the newly established Shanghai free-trade zone have generated lukewarm response, the South China Morning Post reported on Wednesday. So far, only two of some 10 financial institutions that applied for and secured a license to open branches in the zone are foreign banks, namely Citigroup of the United States and DBS of Singapore, according to the newspaper. The rest are all major state-owned lenders, it said. Asked why some overseas lenders are reluctant to open branches in the zone, one banker cited a regulatory requirement for banks in the zone to have completely distinct systems of internal compliance, risk management and human resources from their operations in the rest of the mainland, the report said. Other lenders said they were awaiting for detailed rules on bank operations in the zone, it added.
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