# Presentation: 411763

## Equity Investment of Overseas Financial Institutions in Chinese Financial Institutions

**Zhou Jialong**
**Director**
**China Banking Regulatory Commission**
**May 23, 2008**
**Dallas, Texas**

## 1. Overview

**As of the end of 2007, 51 overseas financial investors had made investment of US $ 22.066 billion in 44 Chinese financial institutions.  **
**25 Chinese banks brought in 33 overseas investors with their investment total up to US $ 21.253 billion.**
**19 Chinese non-banking financial institutions brought in 18 overseas investors with their investment total up to US $ 0.813 billion.**

## 2. Investment of overseas financial institutions  in  small and medium-sized rural financial institutions

**By the end of 2007, 3 rural banks had introduced 3 overseas investors with their investment RMB 2.443 billion:**
**Shanghai Rural Commercial Bank introduced ANZ Bank and International Financial Corporation (IFC).**
**Tianjin Binghai Rural Commercial Bank Corporation introduced IFC.**
**United Rural Cooperative Bank**** of Hangzhou introduced ****Rabobank Nederland and IFC.**
**Involvement of overseas financial institutions in township and village banks loan companies:**
**Hubei Suizhou Cengdu HSBC Rural bank Company is already open, and another township and village bank in Dazhu, Chongqing province invested by the HSBC has been approved by the CBRC and is now under preparation for open.**
**Standard Charter has submitted its application for the establishment of the township and village banks in Linger county, Mongolia province.  The application now is under review by the CBRC.**
**CitiBank is conducting a study on the feasibility of establishing loan companies in China.**

## 3.Rules and regulations on the investment of overseas financial institutions in Chinese financial institutions

**Rules on Administrative Licensing---**
***Administrative Rules Governing the Equity Investment in Chinese Financial Institutions by Overseas Financial Institutions***
***Rules on Implementation of Administrative Licensing Items for Domestic Commercial Banks***
***R******ules on Implementation of Administrative Licensing Items for Cooperative Financial Institutions***
***Provisional Rules Governing Village or Township Banks***
***Provisional Rules Governing Lending Companies***
***Implementation Rules on Administrative Licensing Items of Non-bank Financial Institutions***

## 3.Rules and regulations on the investment of overseas financial institutions in Chinese financial institutions

**Guidelines and principles---Encourage and support Chinese financial institutions to bring in qualified strategic investors.**
**State shall maintain its position as the controlling shareholder.**
**Cooperation should be conducted on commercial basis in line with the principle of "being voluntary and of mutual beneficial".**
**For the Chinese side, the purpose for the introduction of the strategic investor is to improve their corporate governance and management by bringing in advanced management and technology rather than the funds per se.  Chinese banks should take into consideration of their own needs when introducing strategic investors.**
**For the foreign investors, usually it needs to be a large financial institution and with abundant experiences in banking management to be a qualified investor.**

## 4. Five Criteria

**Equity share no less than 5%.**
**Share holding period no less than 3 years.**
**Send members to serve on the Board or in senior management position.**
**Investment in no more than 2 banks. **
**Versed in banking management and technology, as well as with the willingness for cooperation.**
**Issues concerning the chosen of the strategic investors and the pricing of the shares should be dealt with on commercial basis in line with the principles of being voluntary and through negotiation.**

- Thank You