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Reply #32: China lifts barrier on local bank fund units [View All]

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54anickel Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Nov-12-04 09:35 AM
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32. China lifts barrier on local bank fund units
http://news.ft.com/cms/s/bb8839ea-341a-11d9-a728-00000e...

Beijing has approved the establishment of fund management ventures by local commercial banks - a decision expected to attract interest from foreign money managers seeking partners in China.

It is a breakthrough in the Chinese financial sector because the government has until now prohibited banks from directly owning securities companies.

Liu Mingkang, the chairman of the China Banking Regulatory Commission, said the State Council had cleared local banks to do the fund business in ventures with qualified partners with a record in the area.

snip>

Ma Weihua, president of China Merchants Bank, said his bank had been talking to several foreign institutions to form a joint venture fund management firm. Foreign participation, if approved, would be capped at 33 per cent of the equity. "We could have one or two foreign partners but the foreign stake would be limited to 33 per cent."

Allowing commercial banks into the fund management business was an important reform. One reason was that banks were too reliant for revenue on the difference between the loan and deposit rates, but in future should derive more income from fee-based operations. Another reason was to inject more funds into the stock market, which still plays little role in China's capital markets. Banks account for more than 90 per cent of China's financing needs.

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