China banks approved to invest in high tech firms: regulator

The logo of Bank of China is seen in Rome, Italy April 11, 2016. REUTERS/Tony Gentile

BEIJING (Reuters) - China has given the go-ahead for 10 commercial banks, including Bank of China 601988.SS, the Bank of Beijing 601169.SS and the Bank of Shanghai to begin a pilot program to directly invest in technology companies.

The pilot program, aimed at supporting high-tech innovation, will be limited to five “demonstration zones’ in the cities of Beijing, Shanghai, Tianjin, Wuhan and Xian, according to a document published by China’s banking regulator on Thursday.

The purpose of the scheme is to provide financial support for the seeding, start-up and growth of scientific ventures, and to effectively increase the funds available for high-tech enterprises, said the document, drawn up by the China Banking Regulatory Commission, the Ministry of Technology and the central bank.

The banks are required to set up subsidiaries to carry out the investments, which can consist of equity or loan-linked investments, it said.

Reuters reported in February that China was planning a pilot program to allow selected commercial banks to set up equity investment arms that would take direct stakes in technology firms, stoking competition with private equity players.

Reporting by Matthew Miller and David Stanway; editing by Jason Neely