Newbridge Capital, a private equity fund from the United States, has received approval from the Chinese Government to become a strategic investor in the Shenzhen Development Bank, the bank said in a statement yesterday.
The medium-sized lender, one of four domestically listed banks, gave no further details of the deal.
"After obtaining approval by relevant departments, it is agreed that Newbridge Capital will become a strategic investor in our bank," the bank said.
It said preparations for the deal were in full swing and both parties would strive to complete it as soon as possible.
Many players in China's banking industry have been deep in talks with potential foreign investors since China became a member of the World Trade Organization last December and promised to open the sector to global giants over the following five years.
By introducing foreign financial institutions as equity owners, Chinese banks are expected to obtain first-class management expertise to help them survive the mounting competition, said Zhang Liqun, a senior researcher with the Development Research Center under the State Council.
The foreign shareholders, in turn, will gain first-hand knowledge of China's banks, enterprises and the economy, which are crucial for their operations in a foreign country, Zhang said.
Foreign banks have already sped up their entry into China's banking industry since last year, he said.
Earlier this month, the International Finance Corporation, the World Bank's private-sector financing arm, and Canada's Bank of Nova Scotia signed a framework deal to invest in the small Xi'an City Commercial Bank of Northwest China's Shaanxi Province.
Other banks with foreign shareholders holding a minority stake of up to 15 percent include the Bank of Shanghai, Nanjing City Commercial Bank and China Everbright Bank.
The Bank of Communications, China's fifth-largest commercial bank, is also talking with a few foreign financial conglomerates to forge a strategic alliance through a stake transfer.
Song Feng, an official with the bank, said the People's Bank of China, the central bank, has already approved the commercial bank's plan to sell a 15 percent stake to foreign partners.
But Song said his bank had yet to audit its assets and choose a suitable partner or partners.
According to the central bank, foreign investors are now allowed to take up to 15 percent of a domestic lender's registered capital.
(China Daily September 29, 2002)
