The China Banking Regulatory Commission has issued new rules to regulate internal finance firms by large corporations which also further open them for foreign investment.
The commission said the new rules were aimed at improving the returns of conglomerates in the mainland while better regulating ownership of non-banking financial organisations.
'These finance companies are heavily regulated and can't take any retail deposits, so they are most interesting for companies such as Volkswagen or Nokia with huge operations here that may be doing their banking with five different banks and would find it more efficient to internalise a lot of their deposit and lending business,' BNP Paribas analyst Isaac Meng said.
'Most overseas financial institutions are still looking for insurance, retail and investment banking investment opportunities.'
Under its World Trade Organisation accession commitments, the mainland largely opened the domestic banking sector to foreign competition in December last year, giving international financial companies unprecedented access to more than 43 trillion yuan in banking assets.
Many of the country's largest state-owned conglomerates have already established internal finance companies, which have been major contributors to the recent bull run on the mainland stock market through their investments in equities.
