China’s banking regulator told 17 banks that their licenses to manage private-equity funds will be revoked because any such investment activities should be handled by independent subsidiaries, Caixin magazine reported on its website, citing unidentified people.
China’s commercial banking laws forbid banks from investing directly in non-bank institutions unless they get special approval from the State Council, according to the Caixin report. The 17 banks, which include China Everbright Bank Co. and China Minsheng Banking Corp., had applied for or received private equity licenses either in the name of the parent bank or of their asset-management divisions, the report said.
Instead, the banks should apply in the name of an independent subsidiary, Caixin said. None of the banks has so far issued any private-equity products since receiving the licenses, according to the report.
A representative of the China Banking Regulatory Commission didn’t have an immediate comment on the Caixin report.
— With assistance by Jun Luo