"The regulator will encourage foreign banks to conduct more diversified business, especially in the areas of asset management and institutional banking, in which they have competitive advantages," said Zhang Xingrong, managing director of the Institute of International Finance at Bank of China Ltd.

"While the effort will increase market competition, it will also bring opportunities for business cooperation between Chinese and foreign banks in terms of overseas investment banking and the offering of financial services to high net worth individuals," Zhang said.

Looking ahead, financial regulators are expected to allow more foreign banks to set up joint ventures in the sectors including securities, insurance, funds and financial leasing, he said.

Societe Generale, a French multinational financial services group, plans to launch a joint venture securities company in China as the controlling shareholder, with an investment of 1 billion yuan.

It is looking for one or several partners in the run-up to detailed rules on market access for foreign investments, according to a report on the website of The Economic Observer, a Beijing-based weekly, in January.

Back in December, HSBC Qianhai Securities Limited, the first joint venture securities company majority-owned by a foreign bank, formally opened for business in Shenzhen, Guangdong province.

The joint venture is 51 percent owned by The Hong Kong and Shanghai Banking Corporation Limited and 49 percent by Qianhai Financial Holdings Co Ltd.