BEIJING: Chinese consumers will be the big winners in banking reforms that are expected to deliver higher-quality foreign financial services and force Chinese banks to shape up and meet the competition.

Foreign banks, however, may have to wait before their entry into China pays off due to lingering restrictions and the dominance of domestic financial institutions, analysts said.

The long-awaited reforms, announced on Thursday and are effective from Dec 11, will allow foreign banks unprecedented access across the Chinese market -- just as its increasingly wealthy consumers have excess cash on hand to deposit.

With sophisticated products and services, foreign banks should find willing clients among savvy Chinese consumers who are more used to a stodgy array of domestic banking choices and indifferent service, industry analysts said.

“(Foreign banks) tend to be more oriented around customer service than domestic banks,” said Charlene Chu of Fitch Ratings-China. “That will certainly be a major feature Chinese customers will be interested in.” Currently, foreign banks can only carry out yuan-dominated business with Chinese companies, not individuals, and only in 25 cities. They can also offer foreign currency loans.

Following the reforms, demanded by China's ascension to the World Trade Organisation (WTO) and to be in place by year's end, foreign banks will offer local-currency deposits and loans and issue bank cards, levelling the regulatory playing field with domestic banks.

Standard Chartered, HSBC, Hang Seng and the Bank of East Asia, already experienced players in China, last week confirmed plans to dive into the market.

Their presence will further benefit consumers by forcing improved management of domestic banks, long plagued by poor administration, corruption and a lack of transparency.

“Future competition will force Chinese banks to improve self-management and increase their crisis awareness,” said Wu Yonggang, banking analyst with Guotai Junan Securities in Shanghai.

“But for the time being, the most urgent thing for Chinese banks will be how to fight foreign banks to get more customers,” he said.—AFP