Royal Bank of Scotlands Joint Venture in China

A private bank aimed at the growing ranks of China's super rich has been set up by the Royal Bank of Scotland (RBS) and Bank of China. See original article

The venture, to be based in Beijing and Shanghai, is targeting wealthy Chinese with disposable assets of at least $1m (£511,000) to invest.

RBS said it was "excited by the size of the market place".

A 2005 report estimated China had 320,000 people worth $1m or more, up 6.9% on the year before.

Warnings

Bank of China and its Chinese compatriots have been looking to private banking as another source of income.

The joint venture is branded under the Bank of China name, but RBS chief executive Fred Goodwin said that this may change over time.

RBS owns Coutts - a big name in private banking and one which analysts say may attract kudos in China.

In 2005, RBS led a group buying a 10% stake in Bank of China, the country's second-biggest lender.

At the time it said it would pump $1.6bn into the deal, which it headed on behalf of co-investors Merrill Lynch and Hong Kong billionaire Li Ka-shing.

Foreign investors are increasingly keen to gain a foothold in China's vast banking sector.

However, experts have warned that Western banks risk exposing themselves to China's bad debt problems accumulated after years of state-controlled lending.