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        Regulator revises commercial bank investment rule

        (China Daily)
        Updated: 2007-01-18 08:56

        China's banking regulator has revised a rule introduced early last year requiring any newly established joint stock commercial bank to have "an overseas strategic investor".

        The revised rule, effective immediately, requires only "a qualified strategic investor" for any new commercial bank, according to a statement from the China Banking Regulatory Commission (CBRC) published on its website yesterday.

        Related readings:
         Banks urged to beef up risk control New postal savings bank gets approval Regulators crack down on illegal cash advances in Shanghai
         
        China's bank regulator issues reform guidelines

        Officials from the CBRC said that the commission had encouraged Chinese banks to seek foreign investors so that they could use their expertise and experience to help improve corporate governance and internal control.

        But the continuing opening up of the banking sector has seen the number of qualified domestic investors increase, prompting the regulator to revise the rule, the CBRC said.

        Earlier media reports said the rule change was intended to pave the way for the creation of a new postal savings bank and the reform of the Agricultural Bank of China.

        The CBRC approved the establishment of the China Postal Savings Bank, which is wholly owned by the China Post Group, in late December. And the bank, to open soon, has no intention of introducing foreign investors.

        "The policy change is definitely favorable for the launch of the postal savings bank and the reform of the Agricultural Bank of China," said Li Yongsen, a professor of finance at the Renmin University of China.

        "But it is not only for the two banks," he said. "With the further opening up of China's financial market, it is unnecessary to distinguish between overseas and domestic investors."

        Market insiders also said that the rule change is intended for the future reform of a group of city commercial banks.

        A large group of city commercial banks will launch a restructure this year, but not all of them will be able to lure foreign investors. Meanwhile, the quality of domestic investors is improving.

        The CBRC has also revised an administrative rule on the financial companies of enterprise groups. The previous rule said that financial companies could introduce qualified foreign institutional investors who must then hold their shares for at least five years.

        The requirement was changed to "qualified institutional investors" with a reduced lock-up period of three years.


        (For more biz stories, please visit Industry Updates)



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