🇨🇳 Foreign Banks Cut China Branches

Foreign lenders are shrinking their physical footprint in China as weak returns pressure local operations, with Deutsche Bank, HSBC and Standard Chartered closing branches or sub-branches over the past year. According to a South China Morning Post report, Deutsche Bank closed its Chongqing branch last month after shutting Qingdao earlier this year, leaving it with four branches outside Beijing headquarters.

Foreign banks remain marginal in China’s banking system, with 41 foreign-funded entities holding 4.87 trillion yuan in assets at end-2025, or 1.3% of industry total. Among 27 locally incorporated foreign banks, median return on equity was 1.61% last year, far below the 10% level generally viewed as healthy, reinforcing a shift toward wealth management, digitalisation and cross-border business rather than conventional lending and deposit-taking.

Fitch described the closures as selective network optimisation rather than a market exit, as digital channels reduce the need for smaller outlets. Foreign banks are expected to stay focused on higher-value client segments where they retain an advantage.

#China #Germany #UK

@asianomics