Acquiring strategic stakes in Chinese banks

The acquisition of strategic stakes in China’s national, regional and city commercial banks remains a topic of keen interest to foreign investors. This is so even though, at the time of the author’s writing, foreign investment approvals for these types of investments seems to have been temporarily placed on hold following China’s restructuring of its central ministries and administrative bureaux in April this year. This restructuring included the formation of the China Banking Regulatory Commission (CBRC) to take over the regulation of banks and other financial institutions from China’s central bank, the People’s Bank of China (PBOC), which will remain in charge of monetary policy. The exact delineation of authority between the CBRC and PBOC may not be clarified until proposed revisions to the People’s Bank of China Law and the Commercial Banking Law of the PRC are passed by the National People’s Congress later this year. In the meantime, as one of its first regulatory acts, the CBRC has drafted a long-awaited regulation which should, for the first time, provide a clear regulatory basis for foreign investment in China’s banks (Bank Investment Rules). The draft Bank Investment Rules are currently before the State Council (the equivalent of China’s cabinet) and are expected to be issued in the near future.