April 2 (Bloomberg) -- HSBC Holdings Plc and Citigroup Inc. became locally incorporated in China, paving the way for them to offer local-currency services and take a bigger slice of the nation's $2 trillion of household savings.

Standard Chartered Plc. and Bank of East Asia Ltd. also completed local incorporation. The four are the largest overseas banks in China and have more than 90 outlets there between them. They need approvals from the banking regulator to begin yuan- denominated services.

Foreign banks must incorporate in China to offer yuan-based bank cards and mass-market services, according to rules that took effect in December. The government is giving overseas financial institutions greater access as part of a deal it struck when joining the World Trade Organization five years ago.

Citigroup and other foreign banks previously were only allowed to open one or two branches a year and were restricted in which services they could offer. Citigroup Chief Executive Officer Charles Prince last week announced plans to almost double the U.S. bank's number of China outlets this year, to 30.

``We have to change the way we do business -- we are a local bank now,'' Richard Stanley, chairman of Citibank (China) Co. Ltd. said in Shanghai today. ``The challenge for us is to be local but not lose the essence of Citigroup in running our business.''

Citibank Brand

Citibank (China), with 4 billion yuan ($518 million) of registered capital, plans to issue its own-branded debit cards while continuing to issue credit cards with local partners Shanghai Pudong Development Bank Co. and Guangdong Development Bank. The U.S. financial-services company also wants to underwrite domestic bond sales, Stanley said.

Bank of East Asia, Hong Kong's third-largest publicly traded bank, plans to boost its number of China branches to 100 by 2010 from 27 now, Chan Kay-cheung, an executive director, said today. He forecast operations on the mainland will account for 35 percent of group profit by then, up from 15 percent now.

HSBC, Europe's biggest bank by market value, plans to add 30 outlets in China this year and hire 1,000 people a year in 2007 and 2008. It has 35 outlets on the mainland, the most of any foreign bank.

The new HSBC Bank (China) Ltd., with a registered capital of 8 billion yuan, has 48 billion yuan of outstanding loans and 64 billion yuan of deposits. The company had a pretax profit of 1 billion yuan in 2006, up 31 percent from a year earlier, its chief executive officer Richard Yorke said today. The bulk of the bank's income came from corporate and commercial banking with domestic and foreign enterprises.

HSBC Focus

HSBC will focus on premier banking, offered on minimum account balances of 500,000 yuan, and asset management in consumer finance. The bank will charge a fee of 300 yuan per month on account balances that fall below the minimum.

London-based Standard Chartered aims to double its number of China outlets to 40 by the end of this year.

Overseas banks control about 1.8 percent of China's $5.1 trillion of banking assets. As of Dec. 31, 74 foreign banks operated 279 outlets in 25 Chinese cities. They had $61.6 billion of outstanding loans and $39.7 billion of deposits. Their non- performing loan ratio was 0.7 percent.

Industrial & Commercial Bank of China Ltd., the nation's largest, has 18,000 branches nationwide and more customers --153 million -- than Russia has people.

To contact the reporter for this story: Luo Jun in Shanghai at jluo@bloomberg.net.

Last Updated: April 2, 2007 00:43 EDT