Setting up a foreign-owned bank in China can be a daunting task, requiring strict adherence to the China Banking Regulatory Commission's (CBRC) Measures for the Implementation of Administrative Licensing Items Concerning Foreign-Funded Financial Institutions. The CBRC's requirements can be distilled down to three manageable components: setting up the representative office, applying for a business license, and establishing a branch.

Setting up the representative office

Representative offices (ROs) are necessary vehicles for setting up a foreign-funded bank in China. The RO must be held for a period of two years prior to implementation of licensing for a foreign-funded bank. A RO allows foreign staff to obtain required working visas and residence permits and allows the business to legally employ a local staff as well. It paves the way for more extended and substantial future investment, but also has significant limitations-the largest being that a RO cannot engage in direct business activities.

In order to set up a RO, the foreign-funded bank will need to meet the following six conditions:

(1) The foreign-funded bank is located in a country with a sound financial regulatory system;

(2) The bank was established upon approval of the financial authority of the country or region where it is located, or it is a member of an association of the financial sector;

(3) If a foreign-funded financial institution applies for establishing a general RO within China, it shall have established five or more branch institutions (including ROs) within China;

(4) The bank demonstrates favorable business performance with no record of gross violations;

(5) The bank has effective anti-money laundering measures; and

(6) Other requirements as prescribed by the CBRC.

Assuming these conditions are met, an application can be filed with the CBRC, which will review and approve, or deny, within six months. The following items, set forth in Article 61, must be submitted in duplicate to the CBRC:

(1) An application form as prescribed by the CBRC;

(2) An application document (letter) signed by the chairman of the board of directors or president (chief executive officer or general manager) and addressed to the chairman of the CBRC;

(3) A photocopy of the business license or any other financial licensing document issued by the competent authority of the country or region where it is located;

(4) The articles of association of the applicant;

(5) A diagram of the organizational structure, list of shareholders, list of overseas branches and associate companies;

(6) Annual statements for three years prior to application filing;

(7) An opinion letter regarding opening the RO in China issued by the financial authority of the bank's home country, or a recommendation letter issued by the association to which it belongs;

(8) Photocopies of the identity certification, CV of candidate chief representative or general representative signed by the person authorized by the applicant, as well as a signed disclosure by candidate detailing any criminal record;