The City of London, a geographically small city of about one sq mile radius within Greater London and its financial services hub, would welcome any acquisitions by Chinese companies as long as they are long-term investors, the Lord Mayor of the City of London Corporation, which is the municipal governing body of the City of London, told China Daily in London.

"The UK is an open economy. We welcome inbound investments," said Ian Luder. "So, if China Investment Corporation (CIC), the Chinese sovereign wealth fund, decides to buy stakes in UK banks, it will be good news; the UK will not restrict such ownership."

Luder said he believed the worst was over for banks, and that they would start to recover from the effects of the financial crisis by the first quarter of next year. He elaborated on that by citing two examples.

First, lots of corporate bonds have been issued in the UK over the past two and a half months. "By the end of March, probably, new bond issues might equal the whole of last year's," said Luder.

Second, markets have seen some large equity issues, such as those by Standard Chartered Bank and HSBC, indicating that companies have now started to get funding.

"Now is the time to buy banks at such low prices. This is particularly good for long term investment," he said.

Luder also said people should have realistic expectations from the upcoming G20 summit to be held on April 2 in the city.

"No magic wand can end the recession overnight. The reality is that lots of measures have been taken and they need time to work," he said. "What we need is a common framework and a common regulator."

On the regulatory side, there is general agreement that banks should have higher capital adequacy ratios to deal with any future crisis, he said.

"Banks should be required to create counter-cyclical buffers by increasing capital in good years that will help create capital buffers during bad years," Luder said.

He also said that the role of the shareholders and boards at financial institutions must change to ensure better corporate governance.

(China Daily March 27, 2009)