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China seeks foreign investors in banks
(AP)
Updated: 2005-11-03 15:18
SHANGHAI, China (AP) -- China expects foreign investors in its banks to make
long-term, strategic investments that will help build up domestic lenders, an
industry regulator said, amid reports a $3.1 billion deal between the Bank of
China and Singapore's Temasek Holdings may have stalled.
In comments reported by state newspapers Thursday, Tang Shuangning, vice
chairman of the China Banking Regulatory Commission, said any foreign strategic
investor should take at least a 5 percent stake in a Chinese lender and cannot
buy into more than two domestic banks, to prevent conflicts of interest and
monopolization.
China's banking regulator views the commitment of any foreign investor to
improving the corporate governance and management and risk know-how of the local
banks they invest in as crucial, the China Securities Journal and other
newspapers cited Tang as saying.
Such an approach would promote a "win-win" form of cooperation, said Tang,
whose remarks were also posted on the commission's Web site.
The comments came amid reports that Temasek Holding Pte.'s bid for a 10
percent stake in Bank of China has so far failed to gain approval, although a
similar deal with the Royal Bank of Scotland PLC was endorsed.
Bank of China is one of four huge state-owned banks being revamped to improve
competitiveness and pare down bad debts as the local banking industry prepares
for a full opening to foreign competition next year.
Regulators have encouraged the banks to seek investment and expertise from
foreign partners, although total foreign investments in any single bank are
limited to 25 percent, with the stake allowed to each investor capped at 20
percent.
Royal Bank of Scotland Group announced it is leading a consortium that
includes Merrill Lynch & Co. and Hong Kong tycoon Li Ka-shing in taking a
combined 10 percent stake in Bank of China.
UBS AG, Switzerland's biggest bank, has also agreed to invest $500 million
for about a 1.6 percent stake.
The Bank of China issued a statement earlier in the week saying the
regulatory approval process for the Temasek deal was proceeding "as normal."
However, the Asian Wall Street Journal, citing unnamed people familiar with
the situation, reported Thursday that China is concerned that Temasek may be
getting "too much too cheap."
Temasek invested $1 billion in China Construction Bank's $8 billion initial
public offering, the world's biggest IPO this year. It also has a stake in
smaller lender China Minsheng Banking Corp.
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