Study On Foreign Strategic Investors Of Chinese Commercial Banks

China’s accession to the World Trade Organization open a new way for foreign investors on investing in China. Regulations and restrictions relaxed or eliminated also make foreign institutions play a more important role in China economy. Foreign banks can join in Chinese financial system by setting up a branch company, representative office or holding local banks’shares. Although the shares is restricted, foreign banks and financial institutions invest in China is still very bullish. Asian Development Bank joining in Everbright Bank in1996opened the door of Chinese commercial banks introducing foreign strategic investors. After that, the Bank of Shanghai, the Bank of Nanjing and Shanghai Pudong Development Bank have introduced foreign strategic investors one after another. To improve the safety, at the end of2003, the China Banking Regulatory Commission (CBRC) stipulated a20-25percent principle whereby an individual foreign bank can hold a maximum20percent shareholding in the stock of a local bank, and the total holdings of foreign banks in any local bank must not exceed25percent. Based on this regulation, numerous foreign banks acquired shares in local banks. In this paper, throughing the method of combining theory with practice, we studied on the commercial banks introducing strategic investors.At first, this paper introduced the history and the present situation of Chinese commercial banks introducing foreign strategic investors briefly and analyzed the reasons of cooperation between foreign financial institutions and Chinese banks. Next, we studied the effect from the micro and macro perspectives and used empirical method to construct two models of the micro and macro to proving. Through the analysis, the article insisted that the commercial banks introducing foreign strategic investors can improve the bank’s profit level and innovation ability, but increase the cost of bank in a short period of time. This result may be due to the fact that commercial bank introducing foreign strategic investors will improve technical facilities and personnel training and because of the difference of region or strategic goal, Chinese bank and foreign bank’s internal culture cannot quickly fusion, communication barriers and strategic differences will cause certain cost. From a macro point of view, although taking challenge to China’s financial security and supervisory ability, the foreign strategic investor introduction can improve the overall efficiency of the banking industry. Finally, the article gives some suggestions: Formulated a reasonable price of banks and exit mechanism; Pay attention to the communication and the cultural fusion; Perfected laws and regulations and improved the supervision.