China removes foreign-stake limits in banks, asset managers

Overseas financial institutions will now be treated the same as local companies, the China Banking and Insurance Regulatory Commission said in a statement, taking forward a process started last year. Foreign stakes were previously capped at 20% for a single institution and 25% for a group of foreign investors.

Nomura Holdings Inc. and JPMorgan Chase & Co. have sought to take advantage of the easing, including by setting up joint ventures in China. Bank of Communications Co. would be open to HSBC Holdings Plc raising its stake in the company, should the Hong Kong-based bank wish.

Foreign banks held CNH 2.9 trillion (USD 420.1 billion) of assets in China at the end of 2016, some 1.3% of the total and the lowest share since 2003, CBIRC data show. They earned CNH 12.8 billion in the nation last year, less than 1% of the profits at Chinese counterparts.

The prospective gains, however, are enticing. Earnings at foreign banks are set to grow more than 10 times by 2030, according to Bloomberg Intelligence. Meanwhile, for foreign money managers, a 6 percent market share by 2030 would mean USD 1.8 trillion in assets, according to a BI estimate published in May 2018.