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Criteria Set for Banks to Select Overseas Investors

A senior official of China's banking watchdog proposed five criteria for domestic banks in selecting strategic overseas investors on November 2, according to Xinhua News Agency.

Strategic overseas investors should have to hold no less than 5 percent stakes, said Tang Shuangning, vice-chairman of the China Banking Regulatory Commission (CBRC).

"This is because overseas investors will not be greatly enthusiastic in helping local banks frame a strategic plan or contribute to their management if the investment ratio is too low," he explained.

A 5 percent of stake is a prerequisite for an overseas investor to be recognized as "strategic," he said.

Tang proposed that a strategic investor must hold a stake for a minimum of three years, elaborating that it could help collaborators establish long-term cooperative relationships.

Strategic investors have to send directors to the directorate so that the joint ventures can absorb advanced concepts and techniques to improve management and decision-making, Tang said.

To avoid national financial risk and monopolization, Tang proposed that one strategic investor should not hold stakes in more than two Chinese banks in the same category.

He also asked domestic banks to attach importance to advanced techniques including product development, marketing and risk management.