Centrally-administered State-owned enterprises (SOEs) in overcapacity industries will be banned from buying into commercial banks, the Securities Times reported Tuesday, citing sources with the China Banking Regulatory Commission.
The sources named the six industries as steel, cement, shipbuilding, electrolytic aluminum, coal and chemical industries.
But the CBRC will back central SOEs' buys in the banking sector provided they are in emerging industries like telecom and electronics. The banking regulator is also supportive of central SOEs' control in trust companies, the sources told the paper.
The CBRC has been cautious about central SOEs' role in the banking sector, the paper said, as it would be easier for a bank controlled by an industrial enterprise to evade regulators' supervision.
Also, as a bank's majority shareholder, an enterprise may take advantage of its position to finance its capacity expansion. This would accelerate the development of emerging industries, but could lead to a vicious circle for an industry at overcapacity, the sources said.
Moreover, the combination may assist the SOE to monopolize the market, the report said. It could even put the bank deposits at risk as they might be invested in the majority shareholders' projects.
The country's state asset watchdog and the central bank also have taken a prudent view on the combination between banks and SOEs, the paper said.
