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China toughens stance on banks' acquisitions
Updated: 2009-02-26 16:57

China's banking regulator has told the country's five biggest lenders, including Bank of China and China Construction Bank, that it will step up regulation of overseas acquisitions and investments as it confronts the global financial crisis, a source familiar with the situation said.

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The China Banking Regulatory Commission also told the lenders it would examine the quality of new loans and boost its monitoring of the quality of existing loans, while calling on them to prepare for the possible exit of foreign strategic investors as share lock-up periods expire, the source said.

China's five biggest lenders, which also include Industrial & Commercial Bank of China, Bank of Communications and Agricultural Bank of China, have avoided the severe financial difficulties that hit western rivals such as Citigroup and Royal Bank of Scotland.

But worries have mounted that risky overseas investments could undermine their financial health, while government pressure to boost lending and bolster the slowing domestic economy could lead to a rise in non-performing loans.

"The current economic and financial crisis is having a huge impact on the global economy, while massive potential risks have built up," the source quoted the regulator as saying.

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