JPMorgan Chase & Co., the largest U.S. bank by assets, said it has injected an additional 2.5 billion yuan ($394 million) in its China operations and received approval to set up a branch in Suzhou, as it follows its rivals in expanding in the world’s No. 3 banking market. (AP Photo/Mark Lennihan)

By Ma Nan

JPMorgan Chase & Co., the largest U.S. bank by assets, said it has injected an additional 2.5 billion yuan ($394 million) in its China operations and received approval to set up a branch in Suzhou, as it follows its rivals in expanding in the world’s No. 3 banking market.

The capital injection brings the total registered capital of JPMorgan Chase Bank (China) Co. Ltd. to 6.5 billion yuan, the U.S. lender said in an emailed statement.

"The additional capital will better position the bank in the evolving regulatory environment and cement our commitment to clients in China. The capital will be used to expand the bank's branch network, develop products, increase corporate lending and recruit employees," said Zili Shao, chairman and chief executive of JPMorgan China.

China is luring foreign lenders to its banking market. Local currency loans have grown by an average 22 percent a year since 2008, according to Bloomberg:

With 114 trillion yuan of assets at the end of last year, China’s banking system is larger than the combined size of the 30 other emerging markets tracked by Fitch Ratings, and smaller than only the U.S. and Japan. About 45 percent of the nation’s 55 trillion yuan of outstanding loans were doled out in the past three years as the government spurred lending during the global financial crisis to resuscitate the economy.

Foreign banks more than doubled their combined profit from China to 16.7 billion yuan last year, according to the banking regulator. JPMorgan’s China unit earned 297.3 million yuan in 2011, compared with 70.4 million yuan a year earlier, according to its annual report.

The expansion of foreign banks comes at a time when Chinese regulators are gradually liberalizing the nation’s financial system and endeavoring to boost the development of its capital market. The introduction of foreign banks will not only favor international enterprises but also will intensify competition, meaning more innovative products and more choice for consumers.

“JPMorgan now sees a good opportunity to expand in China, given that there’s a lot of demand for all kinds of financial services,” Victoria Mio, a portfolio manager at Robeco Hong Kong Ltd., told Bloomberg. “There’s still growth in China, versus other parts of the world where there’s contraction or slower growth.”