Lu Lugang (1st, R), the first customer of opening his RMB deposit account, displays his deposit receipt at a branch of the American Citibank in Shanghai, April 23, 2007.  (Xinhua/Liu Ying)

    SHANGHAI, April 23 (Xinhua) -- Amid beating of drums and exchange of flowers, Shanghai resident Lu Lugang received a deposit slip from his local Citibank branch on Monday and became the first client to take advantage of the bank's newly launched Renminbi retail banking services.

    Three other overseas banks - HSBC, Standard Chartered Bank and Hong Kong's Bank of East Asia - also began offering local currency retail banking services to customers in mainland China.

    Richard Stanley, chief executive officer of Citibank (China), said that the launch of the retail services was an important moment in the long-term development of the company in China.

    Catherine Fok, head of HSBC China's personal financial services, said, "This is an important milestone in the opening up of China's financial markets."

    Previously, foreign banks were only allowed to handle foreign currency services for individuals on the Chinese mainland, although they could provide both local and foreign-currency services to corporate customers.

    China fully opened its banking sector to foreign banks last December in line with the commitments it made when joining the World Trade Organization in 2001. But the country's rules stipulate that overseas banks must be locally incorporated before they can carry out RMB retail business.

    The four foreign-funded banks were the first batch to establish locally registered subsidiary banks with corporate status on the Chinese mainland. Their retail business will mainly include yuan-denominated deposits, loans and insurance products.

    Launching the service means Chinese banks are facing more competition from foreign rivals, analysts said.

    "In Citibank, there is no lengthy queuing as seen in some Chinese banks," said Lee AhBoon, vice chairman of Citibank China.

    But the foreign banks are not targeting ordinary Chinese. Citibank requires an opening balance of 80,000 yuan (about 10,360 U.S. dollars).

    Guo Tianyong, director of the Chinese Banking Research Center in the Central University of Finance and Economics, said the foreign banks' retail services were only targeting clients with wealth.

    Guo said Chinese banks will still lead the way for the near future, but they need to take a lesson from overseas banks regarding high-quality products, services, risk management and organizational structure to enhance their own competitiveness.