Overseas Financial Institution, Shares In Banks Pricing

In Dec 2003, CBRC(China Banking Regulatory Commission)issued'Administrative Rules Governing the Equity Investment in Chinese Financial Institutions by Overseas Financial Institutions',Which stipulates the equity investment proportion of a single overseas financial institution in a Chinese financial institution shall not exceed 20%, and sets forth the basic law principles for overseas strategic investment institutions. With the gradually opening of the Chinese Banking industry, many international famous financial Institutions engage in equity investment in Chinese Banks. Up to now, 17 domestic commerce banks have introduced 22 overseas strategic investors successfully, and the total investments amount to $16.5 billion. In the year 2005, Bank of China, China Construction Bank, Industrial and Commercial Bank of China, HuaXia Bank introduced foreign strategic investors. During the process of overseas financial institution engaging in equity investment in Chinese banks, the most disputable point is equity price, Obviously, equity price undervalue will cause loss to Chinese banks, on the other hand, equity price overvalue will affect the investing motivation of oversea investors. No doubt, to further attract foreign strategic investors, or to speed up the opening of Chinese banking industry, the study of equity pricing of Chinese banks properly is of great significance.The thesis started from the current situation of the overseas financial institutions investment in Chinese banks,analyzing the characters, the income and risks along with the overseas investment, and conducted thoroughly research on equity price and research methods. By using the business valuation methods that widely adopted in the world, the thesis analyzes the banking valuation theories and methods comparatively, Such as the comparative model, discount model of free cash flow (DCF) , option pricing model and three-factor pricing model. In view of the real situation of Chinese banks, the thesis also discussed the applicability of these models. To conduct demonstration analysis, three-factor pricing method is adopted in China Minsheng Banking Corp.Ltd case study. In the end, considering the influence factors, proposals were made to perfect current equity pricing system.At present, many Chinese scholars have done lot of studies and analysis regarding equity pricing of the Chinese banks, however, most of these works...