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China Ties Bigger Stakes in Banks to U.S. Licenses: FT

Beijing could allow international investors to take bigger stakes in domestic banks if Chinese lenders were given licenses to operate in the United States, the country's top banking regulator told the Financial Times.

Liu Mingkang, chairman of the China Banking Regulatory Commission, tied greater access for foreign investors in China to U.S. banking licence applications from two banks in particular -- the Industrial and Commercial Bank of China and China Merchants Bank.

"Bilateral co-operation is very important if we want to broaden our market entry policies and open the door much wider," Liu said.

The FT said concern over the alleged lack of reciprocity afforded Chinese banks in the United States is constantly raised in bilateral meetings with Washington, but has rarely been stated so clearly in public by a senior Chinese official.

The only Chinese banks with licensed branches in the United States are Bank of China and Bank of Communications, which is about 18% owned by HSBC. Some others have representative branches but have not yet been allowed to open branches, the newspaper said.

The U.S. Federal Reserve, which is responsible for granting U.S. banking licenses, has been cautious on Chinese banks because of concerns over transparency, corporate governance and, until recently, the absence of regulations in China for tackling money laundering, the newspaper said.

Liu said CBRC's assessment of the impact of the equity restriction on the 33 foreign investors who have so far taken stakes in 24 Chinese banks has come up with "mixed conclusions".

"Just like marriages, some are very happy, the others are not very happy," he said in an interview with the newspaper.