Research On Foreign Financial Institutions To Take Stakes In Chinese Banks

Since December2003, when the China Banking Regulatory Commission promulgated Administration of Equity Investment of Overseas Financial Institutions in Chinese-funded Financial Institutions Procedures, foreign financial institutions have been pouring investment into Chinese-funded banks. Up to the end of2006, the Chinese-funded banks had introduced29foreign institutional investors with total investment numbered19billion US dollars. As the lock-up periods of shares started to expire since the end of2007and the world-wide financial crisis broke out in2008, a number of foreign strategic investors chose to sell their shares in Chinese-funded banks, one after another, which brought worries about the national strategy of introducing foreign investments into Chinese-funded banks. However, although some foreign investment retreated, the trend of foreign financial institutions participating in Chinese market via equity investment is still on the way.Based on the reviews of present research, this article tries to research into the practice of foreign financial institutes investing in Chinese-funded banks from the historical perspective of reform and opening-up in Chinese banking sector, and tries to analyze the motivations of the equity co-operation from both sides. With the methods such as case study and comparison, this article will try to provide suggestions on future practice and further reform.