Institutional Banker

　　The foreign commercial banks are probably the earliest among global financial institutions to set foot in China. They have limited business scope in China given that the financial markets have yet to open up. Foreign banks typically focus on non-RMB loans, letter of credits, unsecured revolving credits and trade financing. Within the limited fund raising arena available in China's capital markets, most of the private enterprises with overseas markets and operations often consider tapping the international capital markets. Foreign banks thus far have been focusing on marketing to foreign enterprises and joint-venture companies using traditional loans combined with the new emphasis on advisory services, focusing on overseas capital raising and other investment banking products. The institutional bankers sought after by these foreign institutions are those with 4 to 5 years of experience, have client contacts, and product knowledge on commercial banking as well as investment banking services.

　　Currently, over thirty foreign banks in Shanghai, and twenty three foreign banks in the rest of China (14 in Shenzen, 5 in Tianjin and 4 in Dalian) are permitted to conduct RMB business with Foreign enterprises and Sino-foreign joint venture companies. However, these institutions must meet the 8% capital reserve requirement for their RMB loans. By the end of 2003, some cities in the western region including Jinan, Chengdu, Chongqing and southern city Fuzhou will also be opened to foreign banks for RMB business with foreign and Sino-foreign enterprises. China’s commitment to the WTO is to open up the corporate RMB business to foreign banks two years after its accession. The PBOC has announced that before December 11, 2003, foreign banks will be allowed to conduct RMB business with Chinese enterprises.

　　With this development, foreign banks will need to build up institutional bankers who have the product knowledge and business contacts in order to expand their client focus into the Chinese enterprises. In dealing with Chinese local enterprises, most foreign banks are skeptical of their reported financial statements, corporate governance and internal control procedures and quality of the management. On the other hand, it will be unwise for them to overlook the Chinese local enterprise market if they want to grow their businesses in China. Hence, foreign banks need to recruit local talents who have integrity, and value system that allow them to conduct banking business in accordance to international best practices.