, the China's central bank, will place restrictions on
amount of shares overseas funds or private domestic investors can
own in city commercial banks, a senior official said recently.
Lai Xiaomin, a deputy director in the People's Bank of China's Bank
Supervision Department, announced the central bank's decision while
attending the Forum on National City Commercial Bank's Development
held in Tianjin on September 23.
According to Lai, the volume of shares that outsiders can hold
differs according to the source of the capital. Overseas funds and
private domestic investors can hold no more than a 15 percent share
in city commercial banks. The upper limit for personal investors,
however, is only 5 percent.
Lai said, one third of city commercial banks nationwide have
increased registered capital and expanded their share volumes since
the second half of last year. The People's Bank of China believes
these moves to be a good way of further optimizing joint-stock
structures and reducing risk.
"The People's Bank of China encourages private enterprises,
international financial institutions and foreign commercial banks,
that accord with relevant requirements, to buy shares in city
commercial banks," Lai added.
In
addition, in 222 cities where no city commercial banks exist, the
central bank will encourage local enterprises and personal
investors to establish city commercial banks, in light of the need
for local economic development and scheduled reform of state-owned
commercial banks. For those, which have a registered capital base
of over 100 million yuan (US$12 million) and abide by the Law of
the People's Republic of China on Commercial Banks, the central
bank will approve the formation of banks in principle.
Lai reaffirmed the advantages of introducing overseas capital. He
said, by doing so, city commercial banks will be introduced to
advanced techniques and improve their levels of management
expertise. It will also go a long way towards achieving their
integration with international practices.
(china.org.cn by Tang Fuchun, October 2, 2002)