LawFlash

China Continues Steady Opening Up of Financial Services Sector

May 14, 2018

A recent announcement by Chinese authorities includes removing caps on foreign ownership in the financial services sector, and sets a clear roadmap to implement the reforms aimed at expanding foreign investment in China.

Yi Gang, the newly appointed governor of the People’s Bank of China (PBOC), announced a number of measures on April 11 at the Boao Forum for Asia to further open up China’s financial services sector to foreign investment, including gradually removing foreign ownership caps and limitations on scope of business for banking, securities, asset management, futures, and insurance sectors, and for the first time set a clear timetable and roadmap for achieving the reform. PBOC also published an announcement on March 19, expressly allowing foreign-invested companies to apply for third-party payment service license, and to provide domestic and cross-border online payment and acquiring services in China.

It is expected that many foreign players will be considering entering into or expanding their investment in China’s financial sector in the near future. Small-sized city commercial banks and rural commercial banks would be targets for acquisitions in the banking sector. Some foreign investors in joint venture securities firms/investment banks are expected to seek to increase their stake in the joint ventures to a controlling level. Fund management companies and distressed asset management companies could also attract foreign investment because of good growth prospect in China.

As of May 9, a leading European investment bank has applied with the China Securities Regulatory Commission (CSRC) to increase its ownership ratio in the existing China joint venture to 51%, and a leading Japanese investment bank has applied with CSRC to set up a joint venture securities company with a Japanese investment bank as the controlling shareholder.

View a brief summary of the key regulatory changes and timetable for foreign investment in the financial services sector >>

Contacts

Shanghai
Mitch Dudek
Alex Wang
Sabrina He

Hong Kong
Alice Huang