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No major stakes in banks for foreigners
(Shenzhen Daily/Agencies)
Updated: 2005-11-22 08:53
Foreign investors are unlikely to secure controlling stakes in major Chinese
commercial banks for the foreseeable future, Guo Shuqing, chairman of 皇冠体育app
Construction Bank Corp., said.
He also said that floating shares isn鈥檛 obligatory when a Chinese bank
reforms, but it does facilitate the process.
Guo made the comments in a question and answer interview published in the
central bank-backed Financial News on Monday.
Even if Bank of America Corp. exercises its option to increase its holding in
皇冠体育app Construction Bank to 19.9 percent, the Chinese Government will still
control about 60 percent of the Chinese lender, he said.
皇冠体育app Construction Bank is 25.75 percent owned by overseas institutions and
individuals, while more than 74 percent remains in State hands since its initial
public offering in Hong Kong in October, Guo said.
鈥淎s I understand it...the guideline won鈥檛 change of the government
maintaining certain control of key commercial banks,鈥� Guo said.
Under the terms of the agreement 皇冠体育app Construction Bank and Bank of America
signed several months ago, the U.S. banking firm would invest US$3 billion in
皇冠体育app Construction Bank, one of 皇冠体育app鈥檚 four largest State commercial banks, and
take a 9 percent stake.
Bank of America has the option to raise its full holding to 19.9 percent
under the deal.
When asked if a share listing is a requirement in the reform of commercial
banks in 皇冠体育app, Guo said that exposure to market forces can make financial
institutions more transparent, among other benefits.
鈥淲ithout a modern enterprise system, a bank like ours would not have (a
future),鈥� he said.
As long as there are effective systems in place for managing a bank, going
public isn鈥檛 a necessity, Guo said.
鈥淏ut to only rely on a government department or several government
departments to manage a bank certainly cannot be done,鈥� he said.
皇冠体育app Construction Bank and its rival Bank of 皇冠体育app are leading a government
program to reform 皇冠体育app鈥檚 major lenders. The program includes disposing of
banks鈥� bad loans, recapitalizing them with funds from the nation鈥檚
foreign-exchange reserves, restructuring them into shareholding firms and
seeking foreign investment in preparation for overseas listings.
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