HindustanTimes.com

Wednesday, August 27, 2003

China to let foreigners own bigger share of banks

Associated Press
Beijing, August 27

China plans to raise the stake that foreigners are allowed to hold in
Chinese banks from 15 per cent to 25 per cent, a state newspaper quoted the
country's new banking regulator as saying.

The step is meant to encourage strategic partnerships between foreign banks
and China's midsized and smaller banks, the International Financial News
quoted Liu Minkang as saying.

China has been trying to modernize its banks --_ especially medium-sized
institutions -- in preparation for opening the industry to foreign
competition under commitments to the World Trade Organization (WTO).
"A single shareholder can increase the holding to 20 per cent, but total
foreign investment shouldn't exceed 25 per cent," Liu was quoted as saying
at a recent meeting of foreign bankers in Shanghai.

The report on Tuesday gave no schedule for the change. Liu said the change
could ease foreign banks' entry into China by eliminating the need to apply
for their own licenses. China has promised to let foreign banks compete
directly with Chinese banks by late 2006.

China's industry is dominated by the "big four" major state banks but also
has 112 smaller commercial banks.

As of the end of July, foreign banks had opened a total of 151 branch
offices in China, Liu said.

© Hindustan Times Ltd. 2003.
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