Less than one week after the first group of nine foreign lenders was approved to set up local corporations, another six have applied to incorporate locally, allowing them to jump into the lucrative renminbi retail business.

Sources from the local banking regulator said that the second group of overseas banks, including the French Societe Generale and Japan's Sumitomo Mitsui Banking Corp (SMBC), had sent applications for incorporation.

Eyeing the market that brought an average annual growth of more than 30 per cent over the past five years, foreign lenders are contending to extend their products and services to more individual customers. The city sees the influx of foreign lenders as a boost in its bid to become an international financial centre and China's banking hub by 2010.

Last weekend, the watchdog China Banking Regulatory Commission (CBRC), approved players including Standard Chartered Bank, Bank of East Asia and HSBC to begin preparatory work for setting up local corporations in China.

Once the banks complete this process, the CBRC will approve the official establishment of their local corporations.

"The foreign lenders have been lured by the prospect of getting a piece of the huge slice of the Chinese market," said Li Hong, an analyst with Shanghai University of Finance and Economics.

Statistics suggest that since China's entry into the World Trade Organization five years ago, the combined assets of foreign financial institutions jumped 31.3 per cent each year to more than US$60 billion at the end of this October.

The total loan balance topped US$30 billion, an annual surge of 41 per cent, while the deposit balance stood at US$17 billion, up 81 per cent every year.

Looking forward to engaging in the renminbi retail business, many of them have included building a local bank for local residents into their China strategy.

"We don't want to be a foreign bank only targeting a small number of wealthy people," said Marc Poirier, China country manager of Societe Generale. "Instead, we would like to be a universal local bank serving all Chinese customers."

The French lender, which boasts outlets in major cities such as Beijing, Shanghai and Wuhan, lost a bidding war among overseas suitors for a stake in the 500-branch Guangdong Development Bank (GDB).

The lender's executives have said that GDB's national outlets were the best platform to run its retailing business, which remained its backbone.

"GDB will be our only investment in a commercial bank for retail banking, consumer finance and credit cards," Poirier said.

Japanese players are also homing in on China. Mizuho Corporate Bank and Bank of Tokyo-Mitsubishi UFJ Ltd have received the green light to incorporate in Shanghai.

Tokyo-based SMBC, the third-largest bank in Japan and the eighth-largest bank in the world as of 2006, could be the third Japanese lender to get approval.

In a move that is rare for a Japanese bank, SMBC established its strategic headquarters in Shanghai earlier this month.

The banking regulator is expected to send feedback in two weeks, and foreign players could open their local corporations as early as February.