The local incorporation of overseas banks on the Chinese mainland is expected to at most triple by 2011, said PricewaterhouseCoopers report today.

About 40 to 60 overseas players are expected to set up local incorporations on the mainland, PwC said. There are already 21 locally incorporated overseas banks on the mainland including HSBC, DBS and Bank of East Asia.

About 100 overseas banks are expected to take a presence in China by 2011 from 76 now, the report said.

The majority of foreign banks in China anticipate strong revenue growth over the next few years, with clusters of banks foreseeing 40 to 50 percent annual revenue growth, the accounting firm said in a survey today.

Nine of 42 overseas banks said they expect revenue to double in 2008. PwC surveyed 42 overseas banks in China, interviewing chief executive officers or senior executives and branch managers from banks including Citibank, HSBC and RBS.

Corporate banking, investment banking, treasury and trade finance are among the main profit contributors.

Foreign banks continue to identify the regulatory environment and staff retention as the biggest challenges. About 50 percent of respondents said the turnover rate will be more than 20 percent this year, with staff hopping to other overseas lenders. The turnover rate is expected to continue in three years.

The three most difficult hiring positions are senior executives, compliance officers and wealth management officers.

All respondents said they expect payrolls to almost double (99 percent) in three years.

"It is interesting to note that partnering with a joint stock commercial bank became a less desirable option this year compared to the findings of 2005 and 2007; perhaps one of the reasons is that such opportunities have become less available," said Raymond Yung, PwC financial services leader for China's mainland.

Acquisition interests were focused on securities, insurance, wealth management, leasing and asset management.

(Shanghai Daily June 23, 2008)