January 6, 2018 / 6:38 AM / a year ago

China tightens scrutiny on commercial lender shareholders

BEIJING, Jan 6 (Reuters) - China’s banking regulator has published interim measures to increase scrutiny over shareholdings of commercial lenders, while restricting the number of significant investments any shareholder can make in a domestic bank.

The China Banking Regulatory Commission (CBRC), which published the new regulations on its website late on Friday, said they were aimed at addressing “disorder” in the banking sector, including the abuse of rights by major shareholders and the prevalence of “invisible shareholders”.

A single investor can hold 5 percent or more, considered a major shareholding, of no more than two commercial banks, or a controlling stake of no more than one lender, the rules state.

Any stake purchase of more than 5 percent must be approved by the CBRC and major shareholders of commercial lenders cannot hold interests in the same institution via financial products.

The measures, which follow draft regulations released in November, also require major shareholders to disclose their ownership structures up to the ultimate beneficial holder.

The regulatory moves could have implications for companies such as Anbang Insurance Group, which holds multiple stakes in commercial lenders.

As of Sept. 30, Anbang Insurance Group held a 15.54 percent in China Minsheng Bank as a result of a direct stake held by Anbang Life and through two separate financial products, company filings show.

The Beijing-based insurer also held a greater than 13 percent interest in China Merchants Bank Co through its property and casualty insurance unit during the same period.

In separate measures published on its website on Saturday, the CBRC announced new rules regulating entrusted loans, including strengthening risk management, supervision, and disclosures on the source and intended use of the funds.

In recent months, Chinese regulators have introduced a series of new measures aimed at controlling risk and leverage in the financial system, with everything from lending practices to shadow banking under the microscope. (Reporting by Matt Miller and Philip Wen; Editing by Sam Holmes)

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