On the heels of UBS' disposal of its entire 1.33 per cent stake in BOC last month, Royal Bank of Scotland Group on Thursday sold a 4.3 per cent stake in the lender for as much as HK$18.4 billion, ending a strategic investor relationship that began in 2005.

Bank of China is not the first and unlikely the last to be abandoned by foreign stake holders.

With the three-year lock-up period expiring soon, strategic shares held by foreign investors that could be disposed of include the combined 7.2 per cent stake in Industrial and Commercial Bank held by Goldman Sachs, Allianz Group and American Express; the remaining 5.79 per cent stake held by Bank of America Corp in China Construction Bank Corp after it trimmed a 2.4 per cent stake on January 7; and the remaining 3.99 per cent stake held by RBS China Investment and the 4.13 per cent stake by Singapore sovereign fund manager Temasek Holdings in BOC.

Analysts expect future stake sales to put pressure on mainland banks' share prices in the near term, but rule out any adverse impact on their management and business operation as the foreign partners have played a limited role.

A total of 41 of the 83 mainland commercial banks have foreign strategic investors, who are allowed to hold a maximum 25 per cent stake in any one lender.

The withdrawal of foreign partners put an end to the three-year co-operation with major mainland banks. And even as mutual interests sustain their ties, foreign partners are likely to seek more say in the management of mainland banks.

In 2001, Bank of Communications led the way in bringing in strategic investors. The rationale, as explained by China Banking Regulatory Commission chairman Liu Mingkang, was threefold. State-owned banks needed to be restructured to cope with stiffer competition when the financial sector opened up before the end of 2006 under World Trade Organisation entry commitments. If not, they would continue to weigh on the country's financial health and risk collapse.

Secondly, foreign investors could bring advanced technology, products and management skills which were desperately needed by domestic banks. Thirdly, introducing well-known investors would promote the image of domestic banks internationally, and thus help in their overseas development.

'Undoubtedly, Mr Liu's goals have been achieved. The foreign investors do send charcoal in snowy weather to mainland banks,' said Tang Ming, a former Asian Development Bank economist.

'They played an important role in the banks' reform by offering their expertise in accounting, corporate governance and risk management. Also, they boosted investor confidence in the then unknown banks before their overseas listings in 2005 and 2006.'

From virtual unknowns, mainland banks leapfrogged in the past few years to become some of the world's leading players in terms of market value and profit as the country recorded double-digit economic growth.

But with reforms and their listings completed, the Chinese banks are now reviewing the role of the foreign partners. A source with a bank undergoing restructuring said a CBRC survey to gauge the impact of foreign partners on mainland banks showed that the foreigners' role in management went only as far as brainstorming while mindset and cultural clashes were common.

'We are still on our own,' said a source with the management team of a listed bank. 'Foreigners come to train our staff sometimes. But I don't see any profound change in the way we manage people and things, which is a big weakness of many mainland banks.'

Andy Xie, an independent economist, said foreign partners had functioned as mere consultants because the ultimate decision-maker was still the government.

'Mainland banks have not been fully commercialised,' Mr Xie said. 'Top bank officials are appointed by the central government. Foreign banks initially thought they would be allowed to hold higher stakes and wield bigger influence in the lenders, but it turned out to be wishful thinking.'

At the end of 2007, the United States pressured China to open up the financial sector further by adjusting the stake foreign partners can hold in mainland banks. China agreed to come up with a proposal before the end of last year. But CBRC sources said raising the stake ceiling was unlikely.

'So far what foreign partners have achieved in mainland banks is at a reasonable level. They can do more if the stake limit is raised,' said Peter Tebbutt, a senior director with Fitch Ratings.

'The financial crisis is turning foreign partners into financial investors, from strategic investors in some cases, but not in all cases,' said Mr Tebbutt. 'Smaller banks may be more favoured. Unlike larger banks which remain state-owned in nature, smaller banks may give foreign investors more say in management.'

In October last year, Dutch financial group ING announced it would boost its 16 per cent stake in Bank of Beijing, a city commercial bank, to 20per cent.

Mr Tebbutt said China would find foreign partners still helpful with their expertise in risk and wealth management, information technology and corporate governance, while foreign counterparts would like to share mainland banks' growth based on a vast developing market.

A CBRC official said last week the regulator would not intervene in the stake transactions as long as they are not against the law.