CHINA'S banking regulator clarified yesterday that the rule that the maximum 20 percent stake a single foreign-funded institution can hold in a Chinese bank remain unchanged.
Its clarification came after a widespread misinterpretation of the new rule, which many thought increased the shareholding ceiling for foreign institutions to 25 percent.
Under the draft new rules, sent out for public consultation on March 27, all foreign investors should hold at least 25 percent of voting shares directly or indirectly to control a Chinese-funded financial institution.
It doesn't mean that the 20 percent shareholding ceiling for an individual foreign-funded financial agency has changed, an official with the supervisory rules and regulation department of the China Banking Regulatory Commission said yesterday.
The rule has been tightened in response to cases where some foreign financial institutions with less than 20 percent stake in some Chinese banks have a de facto controlling position, the CBRC said.
CBRC Chairman Liu Mingkang has reiterated the foreign-funded financial institutions can hold controling stakes in non-listed Chinese-funded ones.
Liu, however, has pointed out that if the overseas capital takes up at least 25 percent of the total shares, the original Chinese-funded bank will be treated as a foreign-funded one subject to different supervision rules.
Foreign-funded banks on the Chinese mainland disclosed that they held US$171.46 billion in gross assets by the end of 2007, a jump of 47 percent from the beginning of the year, said a central bank report.