More than a dozen commercial city banks on the mainland that had been looking to raise capital in the stock market will have to shelve their initial public offering plans as Beijing, fearing an influx of bad loans, prepares to tighten review procedures.
The bearish market is also spooking regulators, who are concerned that a fresh influx of equities could knock existing stocks down further.
The state-owned Securities Times reported yesterday that regulators had suspended approvals on city commercial bank listing applications over fears of poor asset quality following rapid expansions in the past two years.
An official with the China Securities Regulatory Commission said no clear rule or notice related to the suspension was issued, but all signs were showing that no applications by the banks would be heard anytime soon.
City commercial banks were supposed to do business within their own areas before the banking regulator published a rule in February 2006 governing their cross-region expansions. But the newspaper said rapid expansion in the past two years sparked worries by regulators, who are reluctant to give the banks fresh capital to continue growing.
The securities regulator will also stop the banks from raising multibillion-yuan funds in the weak stock market, an investment banker said.
