International Law

China Banks Not Too Interested in Additional FDI?

By Stan

China is reportedly planning to increase the lockup period for foreign investment in the country’s commercial banks.

The increased lockup period, from three years to five, would apply to future investments, the Shanghai Securities News said today, citing Liu Mingkang, head of the China Banking Regulatory Commission. (full article)

Normally, this would not be a big issue for anyone. Stakes purchased in China banks are made as long-term investments and as a way to solidify commercial relationships.

On the other hand, a lot of financial institutions out there either have current liquidity problems or will need to worry about liquidity for the next few years. A lock-in period of five years seems like a long time given the global financial crisis.

Does this mean that Beijing is no longer all that interested in foreign investors? Perhaps after that first round of funding that took place a few years ago, the government would prefer that the banks move forward with the current shareholding structure more or less intact.

© Stan for China Hearsay, 2009. | Permalink | One comment | Add to del.icio.us

Full post as published by China Hearsay on April 01, 2009 (boomark / email).