Few banks seen queuing for China's red carpet invite

China stunned the finance world last week when it unveiled plans to allow foreign control of its financial institutions. Few bankers thought their long-held dream of better access to the world's largest banking market was within reach.

The likelihood, however, is that even fewer will rush to take advantage of that opening.

In theory, foreign banks will be allowed to take larger stakes in their Chinese commercial peers - currently capped at 20 percent - while investment banks will be able to take control of their securities joint ventures.

In practice, a combination of well-entrenched local companies and an opaque regulatory regime means global banks will move only very cautiously to exploit the new rules, bankers and lawyers said.

Besides its stringent ownership limits, China has for decades carefully controlled the range of activities open to foreign banks in an effort to protect domestic players, they say, and few expect that to change soon.

"Lifting shareholding limits is just one part of the problem, the bigger concern is whether the foreigners will get a level-playing field in the country," said a Beijing-based lawyer, who works with Chinese banking and securities regulators.

"The global financial industry has changed a lot in the last few years and there's a lot more scrutiny happening on capital allocation, compliance and risks," he said, he said referring to bank managements. "The impact of this move would have been very different four, five years ago."
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