| BEIJING, March 11
BEIJING, March 11 China should sell down
state-held shares in mid-sized commercial banks to less than 50
percent, the largest shareholder in the country's only sizeable
privately controlled bank told reporters on Monday.
China said last year it would allow private investors
greater entry into a number of restricted sectors, including
finance. China's banking sector is dominated by big state-owned
banks, and the state also owns a majority share in nine of the
10 second-tier commercial banks.
"For these mid-sized banks, it wouldn't be a big deal for
the state share to fall below 50 percent," said Liu Yonghao, who
is vice chairman of Minsheng Bank and owns its
"Because the big state banks already dominate 70 percent of
China's financial sector, even if these mid-sized banks were 100
percent private, the state would continue to control the
He wouldn't comment on whether he, or Minsheng, would be
interested in buying state shares.
"If these banks are opened further, it won't affect the
nation. There will only be good results, no negative results,"
he said, addressing why he felt the government should start a
stake selldown targeting mid-tier banks.
"The big state banks are too big. I hope we can gradually
Liu is a deputy to China's legislative body, which is
currently holding its annual meeting, and uses his position to
lobby for rural and private business concerns.
Liu, a mathematics teacher who began selling eggs with his
brothers in the early days of China's market reforms, said that
further privatizing the mid-tier banks would allow more banking
support for small or private firms, which currently have
difficulty getting loans from state-owned banks in China.
Liu's egg business grew to become New Hope Group, which
today is China's largest private agribusiness focusing on animal
feed, poultry and meat.
Liu said he was optimistic about further reform under
China's new administration, which will be formally named this
"We can feel that in the new administration China will keep
emphasis on reform and opening. Financial reform and opening is
of key importance, because most of the banking industry is
government-controlled," he said.
China has already taken steps in recent months to partially
liberalise interest rates, viewed by many as a necessary reform
in moving to a more market-based economy. Traditionally, banks
have relied on the spread between state-set deposit and lending
rates to make money.
Market-based interest rates would narrow that spread, Liu
said, forcing banks to shift their focus to providing more
services to customers in order to compete.
Minsheng's rivals among the mid-sized commercial banks
include China Merchants Bank and Pudong Development
(Reporting By Lucy Hornby and Coco Li; Editing by Ken Wills)