SHANGHAI, June 27 (Reuters) – China’s small and medium-sized
banks, including city commercial banks, are not allowed to list
on the mainland yet because regulators are still studying the
risks and merits of such IPO requests, the state-backed China
Securities Journal reported.
The comment, attributed to an official from the China
Securities Regulatory Commission (CSRC), made clear for the
first time that the government will, for the moment, decline all
requests by smaller banks to list.
But city commercial banks are still allowed to list in Hong
Kong, as Bank of Shanghai is preparing to do.
An earlier newspaper report said the CSRC is reluctant to
approve applications by smaller banks because a wave of bank
IPOs may further dampen investor confidence in an already
sluggish A-shares market.
The regulator could also be worried about the risks of city
commercial banks expanding their businesses beyond their
regions, as these banks are criticised by some analysts for
outright bankrolling of local governments, which are not always
creditworthy.
Many of the country’s 185 city and rural commercial banks
are in desperate need of capital to fend off rising competition
from rivals and meet tougher capital requirement rules.
Chinese regulators have not approved any mainland IPO plans
by smaller banks since 2007, when Bank of Ningbo,
Bank of Beijing and Bank of Nanjing were
listed, seen partly due to worries that a wave of new IPO shares
may hurt the stock markets in Shenzhen and Shanghai.
(Reporting by Carrie Ho; Editing by Eric Meijer)
