China will encourage greater private investment in banks as it seeks to fuel growth in an economy that’s losing steam and to aid small businesses that are short of funds.
Qualified companies can buy into lenders through private stock placements or new share subscriptions, equity transfers or mergers and acquisitions, according to guidelines released by the China Banking Regulatory Commission in a statement posted on its website today. The regulator also said it will encourage private investment in trust, financial leasing and auto- financing companies.
The rules aim to “encourage and guide private capital to enter the banking sector, and support financing in private investments,” according to the statement. The regulator also lowered the minimum shareholding of the main initiator for village banks to 15 percent from 20 percent.
Premier Wen Jiabao said last month China needs to break the banking “monopoly” of a few big lenders, and could extend the successful parts of a pilot program in Wenzhou, a city in Zhejiang province, that allows private financing. The nation’s efforts to tame inflation and cool the real estate market last year with lending curbs and higher interest rates led to a tight financing environment, prompting bankruptcies in Wenzhou.
China’s Securities Regulatory Commission said yesterday it will encourage private investment in securities firms and futures brokerages, and will modify rules to help privately owned companies raise capital.
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