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Wan LixinOpinion deputy editor of Shanghai Daily
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Lockup period on bank investments may go up
By Zhang Fengming |
April 2, 2009, Thursday
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Print Edition
Print Edition
CHINA was reported to be planning to raise the lockup period on foreign investments in the country's commercial banks to five years from three years.
The longer lockup period would apply to future investments, Liu Mingkang, chairman of the China Banking Regulatory Commission, has said.
Liu also said China won't increase the investment cap for overseas investors at Chinese banks.
Presently, the investment cap for a single overseas investor is 20 percent while the limit for a combined investment is 25 percent.
Overseas partners of Chinese banks trimmed their holdings to raise capital as their balance sheets were depleted by billions of dollars in writedowns amid the worst financial crisis since the 1930s.
For example, Bank of America sold part of its stake in China Construction Bank, and Royal Bank of Scotland sold its entire stake in the Bank of China earlier this year.
"Under normal circumstances, foreign banks would not willingly part with their stakes, valued at multiples of their initial values and intended as a means of cementing long-term relationships in a promising financial market," said Moody's in a report yesterday.
The disposals will not impact on the Chinese banks' financial strength, or their ratings, because the divestment will not result in any change to their management or operations," said Wah Leo Wah, a Moody's senior analyst. "We believe that these strategic partnerships have provided and will continue to provide long-term benefits to both foreign and Chinese banks."
The longer lockup period would apply to future investments, Liu Mingkang, chairman of the China Banking Regulatory Commission, has said.
Liu also said China won't increase the investment cap for overseas investors at Chinese banks.
Presently, the investment cap for a single overseas investor is 20 percent while the limit for a combined investment is 25 percent.
Overseas partners of Chinese banks trimmed their holdings to raise capital as their balance sheets were depleted by billions of dollars in writedowns amid the worst financial crisis since the 1930s.
For example, Bank of America sold part of its stake in China Construction Bank, and Royal Bank of Scotland sold its entire stake in the Bank of China earlier this year.
"Under normal circumstances, foreign banks would not willingly part with their stakes, valued at multiples of their initial values and intended as a means of cementing long-term relationships in a promising financial market," said Moody's in a report yesterday.
The disposals will not impact on the Chinese banks' financial strength, or their ratings, because the divestment will not result in any change to their management or operations," said Wah Leo Wah, a Moody's senior analyst. "We believe that these strategic partnerships have provided and will continue to provide long-term benefits to both foreign and Chinese banks."
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