Chinese regulators are examining the possibility of easing restrictions on how much stake major investors can hold in commercial banks, reported Reuters.
The consideration comes as many banks contend with financial pressures from a slowing economy, the news agency noted.
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The National Financial Regulatory Administration (NFRA) reportedly convened with bank representatives in January to explore a potential shift in policy.
Presently, regulations established in 2018 prevent a single investor from becoming a major shareholder, defined as holding at least 5%, in more than two commercial banks, or from having a controlling holding in more than one.
Sources indicate that the NFRA is now contemplating allowing select shareholders to become major investors in up to two additional banks, subject to regulatory approval on a case-by-case basis.
Such applications would be scrutinised based on investor qualifications and the capital position of the bank involved.
The sources said discussions remain preliminary and outcomes may change.
They noted that expanding access for well-resourced investors could help supplement capital for banks, particularly as traditional fiscal support grows less feasible.
If implemented, looser ownership rules would mark a departure from earlier efforts to limit the influence of concentrated shareholders within China’s financial system.
The report added that reliance on state recapitalisation has increased in recent years, especially for smaller regional lenders that face obstacles raising private capital under current regulations.
Earlier this month, authorities announced plans to inject 300bn yuan ($44bn) into state-owned banks during 2024, following $72bn allocated last year to reinforce the sector against systemic risks.
Additionally, officials are reviewing whether large state-owned insurers should be permitted greater investment flexibility in banks, particularly with an eye towards supporting smaller city-based lenders.
The NFRA has not commented publicly on these deliberations.
