Shareholders in China’s Commercial Banks May Need to Reduce Their Stakes

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The China Banking Regulatory Commission has required that shareholders in commercial banks reduce their equity stakes within a year if they exceed 5%,and were acquired via financial products such as insurance or asset management plans.

The directive was made public last Friday, and follows the release of another regulatory document by CBRC in January that targetsĀ malfeasance on the part of key shareholders in Chinese commercial banks, requiring the disclosure of the ultimate beneficial owners of equity stakes.

Under the new directive any existing equity purchase of over 5% made by a given investor or its affiliates must obtain the approval of the banking regulator within a six month period.

According to Reuters the new rules will have an especially strong impact upon conglomerates such as Anbang Insurance Group, who funded the accumulation of shares in Chinese commercial banks via the sale of short-term universal life insurance products that provide high yields.

Anbang Insurance Group reportedly holds a 15.54% stake in China Minsheng Bank and a 13% stake in China Merchants bank via its subsidiaries.

CBRC said that its will focus upon the shareholders in small and medium-sized banks, and investigate whether they are holding equity stakes on their own behalf or as proxies for other parties.

The banking regulator is also in the process of formulating new regulations on shareholding custodianship as part of efforts to raise the transparency of ownership structures.

 

 

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