China urges foreign investors in banks not to look for quick gains - report

[FaGal]

China urges foreign investors in banks not to look for quick gains - report
www.iii.co.uk - March 6, 2005


BEIJING (AFX) - China's banking regulator has advised foreign investors in state-lenders to hold their shares for two to three years after the banks' planned initial public offerings, the 21th Century Business Herald reported.

The China Banking Regulatory Commission (CBRC) was critical of some foreign investors in the mainland banking industry, saying in a research note that some investors were only looking for short-term gains, the report said.

CBRC did not name any investors, but said bringing them on board could be "a double-edged sword" for local banks, according to the report.

The commission also advised that Bank of China (BOC) and China Construction Bank (CCB), two state-lenders preparing for IPOs overseas, to team up with long-term partners rather than those interested in making quick money, it said.

BOC and CCB are reportedly targeting international heavy weights, such as HSBC and Citibank, as strategic investors prior to the listings -- believed to happen this year -- but have failed to finalize any deals.

Meanwhile, the Industrial and Commercial Bank of China and the Agricultural Bank of China, two other of China's big four state lenders eyeing stock market listings as well, have been unable to lure any foreign investors so far.

Due to government restrictions, foreign banks have so far made limited advances in the mainland banking industry.

HSBC controls a near 20 pct stake in the Bank of Communications, China's fifth largest lender, while US financial firm Newbridge Capital holds 17.89 pct of Shenzhen Development Bank Co Ltd (SZA 000001).

Standard Chartered had agreed to buy a 19.9 pct stake in Bohai Bank, a new regional joint stock lender based in Tianjin, and World Bank unit International Finance Corp has minor interests in several city commercial banks.