SINGAPORE, March 24 Oversea-Chinese Banking Corp Ltd (OCBC), Singapore's second-biggest lender, said a relaxation of Chinese bank ownership rules could prompt it to raise its stake in Bank of Ningbo Co Ltd to above 20 percent.
OCBC, No. 2 to DBS Group Holdings Ltd by assets, is trying to expand outside its core markets of Singapore and Malaysia on which it relied last year for about 80 percent of earnings.
In China, the world's second-biggest economy, the bank is waiting for regulators to approve a January proposal of increasing its Ningbo stake to 20 percent from 15 percent.
OCBC would be keen to boost its stake even further if China raised its 20 percent foreign ownership limit.
"In the event that they are willing to relax it we are quite interested to increase our involvement," Chief Executive Samuel Tsien said at the Reuters ASEAN Summit on Monday.
"It is a very good partner bank for us. They are in the right spot."
China's banking system - like its broader economy - has undergone a series of reforms in recent years as the government increasingly leans toward market forces.
Tsien did not say whether he is expecting an increase in the ownership cap soon, but said he does not expect foreigners to be able to own majority stakes in Chinese lenders.
OCBC's recent cross-border merger-and-acquisition attention has been focused on Hong Kong where the increasing dominance of multinational banks has pushed small family-owned lenders to seek partners.
OCBC has been in talks to buy Wing Hang Bank Ltd for what sources close to the deal estimated at $5.3 billion - an OCBC record.
The pair has twice extended the deadline for any agreement, and with the latest deadline of March 31 looming, OCBC on Friday said they have still not reached a deal.
Tsien on Monday declined to comment on the matter, but said he expected fairly significant market growth in Hong Kong, Taiwan and China.
"China's economic activity is really driving the economic activities of Asia right now plus the fact that Chinese companies' desire to move offshore has also created additional opportunities for us," Tsien said at the summit, held at the Reuters office in Singapore.
Speaking about Singapore's slowing housing market, Tsien said new mortgages have fallen by about 40 percent but as customers are still drawing on pre-committed loans, the impact will only be felt next year.
"If the market continues to be in a very low activity level the mortgage loan volume will start to show up in our balance sheet probably in the second half of next year," he said.
Shares of OCBC closed up 1.1 percent in Singapore on Monday compared with a 1.4 percent rise in the benchmark stock index . The shares have fallen 7.8 percent so far this year, underperforming rivals DBS and United Overseas Bank Ltd . (Editing by Christopher Cushing)