Life of Guangzhou - HSBC Gets Rural Foothold in China

HSBC is to become the first foreign bank to break into rural China as part of the country’s pilot programme to expand banking in rural areas.

HSBC, which is already the largest international bank in China with 40 city branches, says the opportunity will allow it to target rural customers in China for the first time.

It has set up HSBC Rural Bank Company in the Cengdu County of Suizhou City in Hubei Province, which has a population of 2m people.

The region is China’s largest producer of shiitake mushrooms for export and half of the mushrooms shipped to Hong Kong come from this area.

HSBC hopes to target smaller farmers and agricultural suppliers and exporters in the region with products such as transactional banking services and trade finance.

HSBC’s approval from the China Banking Regulatory Commission comes at a time when the Chinese government has been expanding market access to financial institutions in rural areas.

The hope is that this will accelerate growth in the agricultural sector, which employs about two-thirds of China’s 1.2bn population.

Richard York, chief executive of HSBC Bank China, said: “This is an exciting prospect for us and there will be opportunities for us to provide a range of services using our experience in rural finance in other markets, such as India.”

HSBC Rural Bank will have up to 25 staff and is set to be established by the end of the year.

Bill Stacey, analyst at Credit Suisse in Hong Kong, said that increased access to financial services would help the mobility of China’s rural population.

(By Jane Croft in London)