The Tentative Re-launch of Offshore Banking Services

Zhonglun Law Firm

In July, the People's Bank of China (PBOC) allowed four of China's commercial banks (the Bank of Communications, China Merchants Bank, Pudong Development Bank and Shenzhen Development Bank) to resume their Offshore Banking Service (OBS) businesses after a three-year suspension. This reversal of the prohibition on offshore banking appears to have been based on the following considerations: the view that foreign exchange services at banks should be used to boost liquidity in the financial system generally; the fact that Chinese commercial banks need to face the competition from foreign banks; and the government's continued mission to further develop Shanghai and Shenzhen as international financial centres.