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BoCom follows SOEs in mixed-ownership reform
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FOLLOWING the approval of its reform plan, the Bank of Communications became the first commercial bank to start the reform of mixed ownership, following in the footsteps of several other state-owned enterprises.
Mixed ownership lets non-state capital invest in state-owned sectors, while ensuring that the state holds the controlling stake, to increase the competitiveness and influence of state assets.
The country’s fifth-largest commercial bank said in a statement filed to the Shanghai Stock Exchange on Tuesday that its overall reform plan had been approved by the State Council, China’s Cabinet, citing a notice from the country’s central bank.
Since early 2014, large SOEs, including Sinopec, PetroChina and State Grid, have unveiled plans to conduct mixed-ownership reforms.
BoCom will optimize its equity-ownership structure through the introduction of private shareholders, giving full play to strategic investors, while exploring how the bank’s management team and employees can secure stakes, the bank said.
Lian Ping, chief economist of BoCom, said that like other SOEs, state-owned banks have ample room to conduct mixed-ownership reforms, although some are already subject to diversified ownership.
“BoCom first introduced foreign capital between 2003 and 2004, but has seldom done so again since,” Lian said.
At present, state capital accounts for a substantial share in state-owned banks, and some medium and small shareholders are not very well represented.
Reducing state capital’s share will free up state funds for construction projects, while diversifying ownership structures to better represent the market’s role, according to Lian.
By the end of March, 54 percent of BoCom was state-owned. The Ministry of Finance owns 26.53 percent, London-based HSBC 18.7 percent, and the National Council for Social Security Fund 4.43 percent.
A landmark 2013 document identified the private sector’s role in fostering economic growth and job creation, and said a diversified-ownership economy model would be followed to allow more SOEs and other firms to become mixed-ownership companies.
In February 2014, China’s top oil refiner Sinopec said it would bring in private capital to jointly sell its oil products, the first SOE to unveil a mixed-ownership reform plan.
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