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* Last week China suspended 3 foreign banks from FX business
* Standard Chartered, Deutsche Bank, DBS hit by ban -sources
* The ban extends until the end of March for some banks
* StanChart has asked China to shorten suspension -source (Adds DBS)
By Engen Tham and Saeed Azhar
SHANGHAI/SINGAPORE, Jan 7 (Reuters) - Standard Chartered and DBS Group Holdings Ltd are among threelenders that China's central bank last week suspended fromconducting some foreign exchange business, three sources withdirect knowledge told Reuters.
Reuters reported on Dec. 30 that China's central bank hadsuspended Deutsche Bank and two other lenders fromconducting some of their foreign exchange business until the endof March, China's latest bid to stem capital fleeing the countryin the face of a weakening yuan.
The notices sent to banks did not give a reason for thesuspension, but the sources for the Dec. 30 story said the banksmight have been targeted due to the large scale of theircross-border forex businesses.
A spokesman for Standard Chartered declined to comment. Whencontacted by Reuters last week, Deutsche Bank declined tocomment. A spokeswoman for DBS declined to comment. China'scentral bank did not respond to requests for comment.
Chinese authorities are starting to police the nation'sforeign exchange market in a way currency traders have rarelyseen before, levying penalty payments for aggressive trading andprompting some banks to turn down business.
It is not clear how long the suspension for DBS Bank willlast, but Standard Chartered is facing a ban until the end ofMarch, the sources said.
One of the sources for the involvement of StandardChartered, which is in the middle of a global restructuring,said the bank had asked the People's Bank of China to shortenthe suspension, while a second source said the suspensionrelated only to forex business conducted with overseas banks.
Standard Chartered made $720 million from forex tradingglobally in the first half of 2015, according to its half-yearfinancial statement, equivalent to 8.5 percent of the lender'stotal operating income. (Additional reporting by Lawrence White in Hong Kong; Editingby Lisa Jucca and Mark Potter)
