The China Banking
Regulatory Commission (CBRC) Monday unveiled a regulation
governing equity investment by foreign financial institutions in
their Chinese counterparts.
The regulation aims to increase the predictability and
transparency of policy in an area of growing foreign interest, it
said.
"In recent years... foreign capital demonstrated a fairly strong
desire to buy into Chinese financial institutions," a CBRC
spokesman said. And the commission realized that "foreign capital
can play an active role in improving the capital adequacy situation
as well as management of Chinese banks."
The regulation raised the ceiling on equity stakes by a single
foreign financial institution to 20 percent, from 15 percent
previously.
Foreign financial institutions that want to buy an equity stake
in a Chinese commercial bank will need to have at least US$10
billion in total assets. Those eyeing a stake in credit
cooperatives or other non-banking financial institutions are
required to have US$1 billion in assets.
CBRC Chairman Liu Mingkang said last week that China encourages
foreign investors to participate in the nation's banking reform and
restructuring drive.
A reform package for the four state-owned commercial banks,
which hold more than half of the nation's banking assets, includes
moves to usher in foreign strategic investors before they proceed
to list on stock markets, government officials have said.
Prior to the promulgation of the regulation, China had allowed
five joint-stock and city commercial banks to sell their equity
shares to foreign investors, but only under the 15 percent
single-investor ceiling.
Liu has said such foreign investments have played a noticeable
positive role in helping their Chinese partners improve the equity
structure and integrate their management method with the best
international practices.
(China Daily December 9, 2003)