The Commonwealth Bank Group (ASX: CBA) says it expects to open its first County Bank at Jiyuan in China’s Henan province later this month.

Commonwealth Bank International Financial Services group executive Simon Blair said the bank will continue to focus on deepening its relationships in Asia.

“Commonwealth Bank of Australia (Jiyuan) County Bank Co. represents an opportunity for the Group to strengthen our ties in China. Our presence in China represents 20 years of commitment and the County Bank is another step in deepening our relationship while delivering on our strategy to focus on SMEs and their owners.”

The County Bank will be established in Jiyuan which has the highest GDP per capita and disposable income in Henan province.

Henan is China’s most populated province with over 100 million people, and is one of China’s top 5 economic centres.

Karen Chen who was most recently head of private banking and head of premium banking, China for Standard Chartered has been appointed chief executive officer for Commonwealth Bank China.

The Commonwealth Bank of Australia (Jiyuan) County Bank Co. will offer a range of lending, deposit and fee-based services primarily to SMEs and their owners. SMEs are a significant part of the Chinese economy and currently are under-banked. The Commonwealth Bank has strong, relevant SME experience and capability which is transferrable to service the SME market in Henan province, the bank said.

According to Mr Blair, County Banking is a unique commercial opportunity available to foreign and local banks.

“The Chinese Government is seeking to have 1000 County Banks established, of which 240 are currently operating in China and just 13 are operated by foreign banks. As the first foreign bank to gain approval to open a County Bank in Henan province, this represents a significant opportunity for the Commonwealth Bank Group.”

Mr Blair is delighted that Bank of Hangzhou (HZB) will take a 20 per cent stake in Commonwealth Bank of Australia County Bank Co.

This stake will deliver an increased scope and depth of learnings. We will look to leverage our partner Bank’s (HZB) capabilities such as IT systems, operational experience and credit processes through this venture.”

“We expect that our experience in SME banking along with Bank of Hangzhou’s experience and reputation as a mid-tier banking leader in China will prove to be a successful combination,” Mr Blair said.

Commonwealth Bank is the first foreign bank to gain approval to open a county bank in Henan province. It is expected to open in Jiyuan on 23 February 2011.