CHINA BANKING AND FINANCE NEWSLETTER
Vol. 4, No. 10 - November 5, 2003
TOPICS THIS ISSUE:
- China's Treasury Bonds In Foreign Currency To Be Traded In Hong Kong
- China Merchant Bank Receives Approval For Bond Sale
- Chairman Of CBRC: Foreign Shares In Banks May Increase To 25%
- Banking Watchdog Sets Up Office in Shanghai
LEHMAN, LEE & XU OPENS SHENZHEN OFFICE Lehman, Lee & Xu is pleased to announce the opening of its new office in Shenzhen, Guangdong Province. Please direct all inquiries to attorney Wendy Zhao at | |
China's Treasury Bonds In Foreign Currency To Be Traded In Hong Kong
On October 16, 2003, the Ministry of Finance ("MOF") of China conducted a "road show" for the treasury bonds in a foreign currency, which will be issued and traded in Hong Kong. The last time that China issued treasury bonds in a foreign currency was in 2001.
Mr. Li Yong, the Vice-minister of the MOF, introduced the background information on the issuance of the treasury bonds in Hong Kong. He reiterated China's official position that the stability of RMB is advantageous to the economic development of both China and the world.
There are six foreign banks involved in the issuance of such treasury bonds in a foreign currency, three USA-funded financial institutions (Goldman Sachs, Merrill Lynch and JP Morgan) and three European-funded financial institutions (Deutsche Bank, UBS and BNP PARIBAS).
A spokesman for Moody's Investors Service stated that the foreign reserves of China are approximately double its foreign debt because of the constant increase in foreign direct investment and the exportation of goods over the past several years. The Chinese government has implemented many policies to improve China's banking industry and minimize non-performing loans that banks hold in their asset portfolio. Moody's has stated in statements issued over the past several months that it expected the Chinese government would be able to continue to remain its foreign reserves at a level that it could repay all of its foreign debts.
Source: Xinhua News Agency
China Merchant Bank Receives Approval For Bond Sale
China Merchants Bank Co, the nation's biggest publicly traded lender, won approval for a record 10 billion yuan (US$1.2 billion) convertible bond sale, spurning minority investors' complaints.
Founding shareholders, who control 73 percent of the lender, supported the sale because the mainly state-owned companies hold non-tradable shares. Minority shareholders, including China Asset Management Co, voted against the sale saying the creation of new shares may lower earnings per share and cause the price of the publicly traded stock to fall.
"The reality is we have to raise funds in the capital market to strengthen our capital base in order not to lose out after China fully opens its banking industry," said Ma Weihua, the bank's president, at the meeting in Shenzhen.
The bond sale, which is equivalent to a fifth of China Merchants Bank's market value, prompted similar plans from property developer China Vanke Co and Cosco Shipping Co, a unit of China's biggest shipping line.
Source: People's Daily
Chairman Of CBRC: Foreign Shares In Banks May Increase To 25%
Mr. Liu Mingkang, the Chairman of China Banking Regulatory Committee ("CBRC") indicated in a recent interview that the situation of the China's banks burdened with heavy debts would improve within the next 5 to 7 years. He indicated that cooperation with overseas investors was welcomed by the CBRC and in this regards, the government was considering increasing the ownership percentage that foreign investors can hold in Chinese banks from 15% to 25%.
According to Mr. Liu, China plans to reform and reorganize the four state-owned banks and tens of thousands of rural credit cooperatives. In addition to investing in joint stock banks and 100 plus urban commercial banks, overseas investors may also become the strategic partners of four state-owned banks.
Liu said that at this time the existing 35500 rural credit cooperatives would be reorganized and merged into about 2000 cooperatives. He also indicated that private funds would be allowed to be injected in rural credit cooperatives and that the foreign investors might be allowed into this business sector but restricted to some of the developed coastal areas of China.
Source: Morning Post
Banking Watchdog Sets Up Office in Shanghai
The China Banking Regulatory Commission Shanghai Supervision Bureau was inaugurated on October 15, 2003, to act as the banking regulator in the emerging global financial center.
The inauguration signifies the official transfer of the supervisory tasks in the local banking industry from the People's Bank of China's Shanghai Branch to the new CBRC office.
The shanghai Bureau will oversee the operations of policy banks, state-owned commercial lenders, national joint-stock banks, city commercial banks, asset management companies, rural credit unions, trust firms, finance companies, deposit-taking post offices and overseas lenders in the city, said the CBRC in a statement.
Source: Shanghai Daily
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