Foreign Debt Quota Expected to Raise for Foreign Banks.doc

1、1Foreign Debt Quota Expected to Raise for Foreign BanksIt is reported that foreign banks in China are likely to have a higher foreign debt quota in the future. But the report confirmed that not all the foreign banks could have a bite of this increased foreign debt quota. The concrete quota is to be

2、determined by the operating status of foreign banks. News said that the four months decrease of FDI in China forced this country to allow foreign banks to bring more capital they raise in overseas markets. Several foreign banks are given higher foreign debt quota in China. The increase varies from 1

3、7% to 100%. Actually, at the beginning of this year, the National Development and Reform Commission (NDRC) issued the notice on how foreign banks apply for the quota of middle- and longterm foreign debt in 2012. In the notice the NDRC said that foreign banks could apply for the quota before February

4、 29, 2012. The NDRC will decide to approve the application or are not based on the foreign debt demand for the loans of fixed assets investment projects. 2It is notable that the Notice contains a clause that lays the foundation for increasing the foreign debt quota of foreign banks. This clause poin

5、ted out that foreign banks could apply for increasing the foreign debt quota once within this year. In order to lower the quotacaused mismatch risk, the NDRC will still consider the foreign debt demand for the loans of fixed assets investment projects when examining the application. In addition, the

6、 foreign debt demand for the individual foreigners loans of buying residential houses in mortgage is excluded from the middle- and long-term foreign debt demand. The overseas middle- and long-term due to banks and other nonresidential deposits will be managed by the State Administration of Foreign E

7、xchanges (SAFE) as the short-term foreign debt. Several foreign banks executives in China confirmed the possibility of increasing middleand long-term foreign debt quota. An insider from a Shanghai-based foreign corporate bank said that the application for the middle- and long-term foreign debt quota

8、 had been done. According to the relevant notice, they are given another chance to increase the quota this year and they are to make clear of the size and usage of the increased quota, the performance of related business and the 3utilization of already given foreign debt quota. Another foreign banks

9、 executive said that the quota increase was not available for all foreign banks in China. “The NDRC will decide the increased amount of the quota for each bank based on their operating conditions.” The data from the SAFE revealed that the balance of the foreign financial institutionsforeign debt, in

10、cluding the short-term debt and middle- and long-term ones, had amounted to 54.054 billion U.S. dollars by the end of 2011. In addition, the amount of middle- and longterm foreign loans newly borrowed by all financial institutions in China reached 44.447 billion U.S. dollars in 2011. A banking exper

11、t said that China had always held the total volume of foreign debt of overseas banks. In comparison, the size and risk of middle- and long-term foreign debt is easier to be controlled, thus the change of the quota will not cause bug impact to the fluidity in the domestic market. “Foreign banks can m

12、ake use of the expanded foreign debt quota to lend more foreign exchange loans in China. Though the cost for foreign debt is higher than ever before, but foreign banks are able to launch more businesses and to earn stable interest balance. This is an important part to facilitate 4foreign banks differentiated competition with Chinese banks,”the above banking expert said.