China tightens bank shareholding rules after lifting cap on foreign stakes
CBRC imposes stricter shareholding rules on Chinese commercial banks, one week after scrapping investment cap for foreign players
All investors – individuals, or those acting in concert to skirt the rules – seeking a more than 5 per cent stake in a Chinese commercial bank will need the approval of China’s banking regulator before a deal could be struck, according to a series of draft rules issued by the China Banking Regulatory Commission (CBRC) on Thursday.
The draft rules came just one week after China announced that it will scrap the cap on foreign investments in mainland commercial banks. They were posted on the CBRC’s website to solicit public opinions till December 15.
The rules highlighted that an investor must not circumvent the required approval for the 5 per cent cap by using related parties, or financial products it controls to take up a stake, as the CBRC moves to close up regulatory loopholes.
“The new rules tighten regulatory over major shareholders and their related parties; it is also worth noting that they came out just one week after China announced the historic opening up in banking investment. Beijing could be using these technical rules to shut out foreign investors they do not like,” said Iris Pang, ING’s China economist.
China announced the opening up of its financial services industry last week, following US president Donald Trump’s visit to the country.
Beijing could be using these technical rules to shut out foreign investors they do not like
Caps on foreign banks’ stakes in Chinese banks and asset managers would be removed, while foreign firms will be allowed to hold a majority stake in joint ventures with mainland Chinese securities companies and life insurers, vice finance minister Zhu Guangyao said last Friday.