UK's central bank has indicated that is it planning to relax terms for the foreign investment banks to enter the British financial market.

The Bank of England is planning to make it easier for the global banks to enter the UK market in order to boost London's role as a major global financial centre. The new rule will reverse a previous policy that forced non-EU banks operating branches in Britain to become standalone subsidiaries with their own capital and liquidity levels.

The policy change is initially targeted at Chinese banks but the policy will be expanded to lenders from any non-EU country, according to Andrew Bailey, the chief executive of the Bank of England's (BoE) regulatory arm, the Prudential Regulation Authority (PRA). The UK is aiming to develop London as the biggest yuan hub outside China and the two sides are also holding discussions for setting up a clearing bank in the British capital for the Chinese currency.

The PRA had said that it will allow foreign banks to operate branches more flexibility as long as they do not accept deposits. The protective rules were a result of British savers losing money in Iceland's banking system.