A group of domestic banks have met the standards for implementation of "go out" strategies, said Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), at the Caijing Magazine Annual Conference 2008: Forecasts and Strategies yesterday.

 

Banks should cooperate strategically when conducting overseas mergers and acquisitions, he said, adding that complete files, including feasibility study reports, must be submitted to the CBRC for approval.

 

The standards for "go out" strategies include high capital adequacy ratios and strict criteria for lending loans, said Liu.

 

Some overseas listing banks own large portions of capital in foreign exchanges and are exposed to great risks, said Liu. These foreign exchange assets must be invested externally to avoid losses due to exchange rate fluctuations. Foreign banks and Chinese banks can also complement each other in many aspects.

 

"Go out" strategies must be a decision of the bank board of directors first, Liu stressed. "The CBRC won't intervene in banks' strategy decisions."

 

Banks should keep cool when implementing "go out" strategies, Liu suggested. They should clearly understand the reasons for their decision. Board directors should cautiously consider many aspects such as finance, law, and management.

 

(China Daily December 11, 2007)