Foreign financial institutions (FFIs) are planning to increase investment in China’s commercial banks or exploring new business opportunities in the country, as China has strengthened efforts to further open up its financial sector, industry experts said. Singapore’s DBS Group announced recently its subsidiary DBS Bank has received Singaporean and Chinese regulatory approvals to acquire a 13% stake in Shenzhen Rural Commercial Bank (SZRCB) worth CNY5.29 billion. After the transaction, DBS Bank will become the single largest shareholder of the Shenzhen-based commercial lender. The investment will allow DBS to increase its exposure in China, one of its six core markets, and accelerate its strategy to expand and grow in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) via Shenzhen, Guangdong province, by strengthening a synergetic partnership with SZRCB in multiple markets and fields. 

The Canada Pension Plan Investment Board said on February 11 it is committed to investing about USD160 million in CITIC aiBank, an internet-based consumer finance bank in China, representing an 8.3% equity stake in the company. China’s top banking and insurance regulator announced in August 2018 it will remove foreign ownership caps on Chinese banks and financial asset managers. The country also released a series of measures to further open up its financial sector. Zeng Gang, Deputy Director General of the National Institution for Finance and Development, said that “by further attracting foreign institutions to its financial markets, the country will optimize the structure of its financial institutions, promote competition, improve market efficiency and better serve the real economy and the rising demand for wealth management”. 

One of the new areas of cooperation between Chinese banks and FFIs is focused on subsidiaries specializing in  consumer finance and wealth management. China Merchants Bank’s wealth management unit is expected to receive an investment of about CNY2.67 billion from JPMorgan Asset Management (Asia-Pacific), which will take a 10% stake. Citi said it is pursuing the establishment of a securities company and a futures company in the country, but will exit consumer banking in China and 12 other markets, the China Daily reports.