China May Lower Bank Holdings Over Time: Huijin OfficialNicholas Comfort and Alfred Liu
China’s government may reduce its stakes in the nation’s biggest banks as it introduces more private capital into state-owned enterprises, an official at the sovereign investor that holds the stock indicated to reporters.
The nation is encouraging “public-private partnership,” Li Jiange, vice chairman of Central Huijin Investment Ltd., told reporters on the sidelines of a conference in Frankfurt yesterday, when asked if there were any plans to change shareholdings in banks. His firm holds stakes in financial institutions on behalf of the Chinese government.
The “trend must be reducing government holdings in the state-owned banks to allow more social capital,” said Li, who is also chairman of Shenyin & Wanguo Securities Co. He declined to give a time frame for any sales to avoid causing declines in capital markets, he said.
Central Huijin has been buying shares of lenders including Industrial & Commercial Bank of China Ltd., the nation’s largest, in recent years as valuations slumped to record lows amid concern an economic slowdown and interest-rate deregulation will erode profits.
The investment firm purchased bank shares during the last six months of 2013, when the benchmark Shanghai Composite Index rallied 6.9 percent. It also bought stock in October 2011 and October 2012, and in September 2008 after the collapse of Lehman Brothers Holdings Inc.