China's banking regulator is considering a proposal to establish a new bank in the northeast as part of the government's plan to revive the country's former industrial heartland, banking sources said. Li Guixian, a former governor of the central bank and a vice-chairman of the Chinese People's Political Consultative Conference, presented the proposal for the new institution to the China Banking Regulatory Commission (CBRC), they said. Mr Li made the proposal after several visits to the region during the summer, when the revival of the northeast moved to the top of the government's agenda, culminating in a detailed plan approved in October by a plenum of the Communist Party. Officials of the CBRC declined to comment. The sources said the CBRC was considering the proposal and what form the bank would take. It could possibly be a new institution, with private or state capital or a mixture of both or a merger of the urban commercial banks of the four main cities in the region - Shenyang, Dalian, Changchun and Harbin. At stake is an important precedent: whether to approve regional banks. China has 15 nationwide banks - the four big state banks and 11 others set up during the past 20 years with a national licence - and 112 urban commercial banks restricted to the cities where they are based. The CBRC has just approved Bohai Bank, headquartered in the eastern port city of Tianjin, to serve the area round the Bohai Gulf, but it has not started operating. Cash-rich banks in the south and southeast are chafing at the bit to extend their operations but the CBRC has refused to approve this. At the end of last year, for example, the Bank of Shanghai had prepared the opening of a branch in Ningpo and sent senior managers to celebrate the event. But the permission it had demanded from the CBRC did not come and they returned to Shanghai empty-handed. The Bank of Shanghai has nearly 200 billion yuan (HK$196 billion) in assets, larger than some of the 11 commercial banks with a nationwide licence. The political leaders of the northeast are lobbying hard for the new bank, saying that it is essential to provide the finance to revive their region and pointing to the examples of Shenzhen, Pudong and Fujian where the central government approved new banks as part of an economic stimulus policy. The CBRC is looking at different forms of ownership for the northeast bank. Some are calling for a completely new institution, with capital from the private sector, arguing that a state bank would suffer from excessive government interference.