China may prevent small banks from listing: report

BEIJING (Reuters) - The China Securities Regulatory Commission (CSRC) may introduce a rule that only allows banks with at least 100 billion yuan ($15.7 billion) in assets to be listed on the stock market, the 21st Century Business Herald said on Tuesday.

More than two dozens regional banks, including Bank of Shanghai and Bank of Hangzhou, are knocking at the door of the CSRC, seeking approval for their planned initial public offerings (IPOs), the paper said.

But the CSRC is reluctant to approve all applications because a wave of bank IPOs may further dampen investor confidence in an already sluggish A-shares market, the newspaper reported. It has thus decided to set a higher threshold.

The newspaper said the proposed rule was criticized by China's bank regulator, however, since it would encourage regional banks to expand their loan books.

"It will drive city commercial banks to expand their reach and asset scale, and that is against the direction of bank regulation and supervision," one local bank regulator was quoted as saying.

China has suspended the IPOs of regional banks for three years in a bid to curb the expansion of these so-called city commercial banks, which are typically focused in one city but have nationwide ambitions.

China has about 110 city commercial banks, but the asset quality of these lenders, especially those in less-developed areas, have been criticized by some analysts for their outright bankrolling of local governments.

Chinese Vice Premier Wang Qishan has urged local financial institutions such as city commercial banks and credit cooperatives to not expand their businesses beyond their regions.

($1 = 6.3606 Chinese yuan)

(Reporting by Zhou Xin and Koh Gui Qing; Editing by Ken Wills)