Bank of China 'courts investors'31.08. 2005 Business
China's number two bank is considering selling minority stakes to foreign investors as a way of helping it restructure and develop its business. The bank, which handles currency dealing for China's central bank, said it would reveal more details shortly. Chinese banks are courting foreign investors ahead of reforms which will open the industry to full competition. Opening up Under the terms of China's admission to the World Trade Organization, consumer and corporate banking services must be opened to foreign competition from the end of 2006. Several Chinese banks - including Bank of Communications and China Construction Bank - have already struck partnerships with foreign firms to gain expertise in areas such as consumer credit and technology. The Wall Street Journal reported that Bank of China was in talks with four companies - British firm Royal Bank of Scotland, Swiss bank UBS, the Manila based Asian Development Bank and Singapore's Temasek Holdings - about potential deals. UBS revealed in June that it was talking to the Chinese bank about a potential $500m investment. The other three companies have declined to comment about their alleged interest. Desirable partner Bank of China acknowledged that talks are taking place with a number of parties but refused to confirm their identities. "What I can tell you is that talks are still going on and we are going to make an announcement no sooner than the end of the month," Wang Zhaowen, a bank spokesman, told Agence France Presse. Bank of China is seen as a desirable partner for foreign financial firms looking to make inroads into China's vast banking market. It has the most international outlook of China's leading banks, boasting offices around the world and a listed subsidiary in Hong Kong. Its position as China's principal foreign exchange bank has also enhanced its profile in the eyes of would-be investors. The Chinese authorities see foreign investment as a way of improving transparency and risk management in the banking sector.