The Asian Development Bank (ADB) is investing US$75 million in
Bank of China (BOC),
one of the nation's Big Four state-owned banks, for a stake that
cannot be sold in the coming three years, the two banks said Monday
in a joint statement.
The deal is the latest in a series of strategic investments by
foreign banks seeking footholds in the fast-growing and
increasingly competitive Chinese banking market.
Chinese banks have been encouraged by authorities to seek
foreign partnerships to build up their capital and improve
management before China fully opens its banking industry to foreign
competition in late 2006.
BOC said the entry of ADB, still pending regulatory approval,
would help it streamline corporate governance. ADB will also
provide technical support for the Chinese bank's internal control
and anti-money laundering efforts.
The move shows the BOC has achieved "initial" success in
pressing forward with reform partly by ushering in strategic
investors, it said.
UBS, Switzerland's biggest bank, announced last month that it
will invest 645 million Swiss francs (US$500 million) in a
partnership with the BOC that will develop investment banking and
securities products and services in China.
The new development comes on the heels of the Royal Bank of
Scotland Group Plc and Temasek Holdings Ptd Ltd., the investment
arm of the Singaporean government, each of which paid about 3.1
billion dollars for 10 percent stakes in the BOC.
Current limits cap equity stakes in a Chinese bank by any one
foreign institution at 20 percent, with the total foreign holdings
limited to a maximum of 25 percent.
Those limits are apparently aimed at preserving state control of
major lenders, analysts say.
According to media reports, Goldman Sachs, American Express Co.
and Allianz AG of Germany have already signed a deal to buy a 10
percent stake in China's biggest bank, the Industrial and
Commercial Bank of China, for more than US$3 billion.
(Xinhua News Agency October 10, 2005)