Foreign banks are rushing to apply for retail and corporate banking businesses after the Chinese regulator approved the first batch of four for local incorporation.

The China Banking Regulatory Commission (CBRC) on Tuesday approved HSBC, Bank of East Asia, Standard Chartered and Citigroup to set up locally incorporated banking subsidiaries.

After incorporation, the banks can begin the process of applying for a wide range of services such as wealth management, mortgage loans and credit cards, as well as open branches at a faster pace.

The foreign financial institutions will also be able to expand their funding sources for corporate banking business by gaining unlimited access to China's 16 trillion yuan personal savings and interbank borrowing.

The overseas lenders were put on an equal footing with domestic banks in competing for the high-end consumer banking business as their know-how, technology and capital have potential to significantly boost the development of the sector.

Local incorporation will give the foreign banks access to China's full retail banking market. But they still need regulatory approval on a case-by-case basis for most businesses targeting local residents. Lenders said they were considering applying for a variety of businesses in a single package to save time.

The approval also means the four lenders can take deposits of any amount, like any other domestic bank. Yu Xueqiang, the head of Bank of East Asia's China business, said the bank would open a deposit account for any customer with as little as 1 yuan. He added that his bank would not charge management fees on small accounts for the time being. Minimum thresholds are standard practice for foreign lenders, which said they would mainly target higher-end customers.

Hong Kong-based Hang Seng Bank, one of the eight foreign lenders going through the incorporation process, said it would require a minimum 300,000-yuan deposit for mainland clients to open an account, and the management fee would only be waived for customers with 500,000 yuan or more.

Local branches and sub-branches will be required to report to Chinese subsidiaries rather than overseas headquarters.