Beijing is considering an unprecedented merger between the mainland's largest foreign exchange bank, Bank of China, and a leading government investment conglomerate, China Everbright Holdings, according to sources.
The proposal, if approved, would create mainland's largest financial services group with combined assets of more than three trillion yuan (about HK$2.8 trillion), the sources said.
The fact that Beijing is studying such a possibility has reflected its keen sense of urgency to restructure and consolidate its banking sector ahead of its entry into the World Trade Organisation, the sources said.
They said it was unlikely to be 'a merger of equals'.
Instead it is more likely that Bank of China will take over the core banking and other financial assets from China Everbright Holdings while disposing off its other, non-core assets.
Sources said it remained unclear when the central government would make a decision on the proposal and whether it would move on to the implementation of the merger.
The sources pointed to Beijing's reshuffle at the top of the big state banks last month, when Liu Mingkang was made the new president of Bank of China while being asked to stay on as the chairman of China Everbright Holdings.