Anbang Insurance Group Co has been asked by Chinese regulators to reduce its stakes in China Minsheng Banking Corp and China Merchants Bank Co to comply with new rules governing bank shareholdings, according to people familiar with the matter.
The insurer will be allowed to own no more than 5% of the two lenders, said the people, who asked not to be named discussing private information. Anbang is Minsheng’s largest shareholder with a 15.5% stake and owns 10.7% of Merchants Bank, according to the lenders’ latest quarterly reports. Those stakes are worth about a combined $20bn based on yesterday’s market price.
To limit the potential market impact of the restrictions, regulators suggested that bank holdings beyond the authorized threshold be transferred privately to other owners rather than sold in public deals, according to the people. Regulators are helping smooth the process by lining up buyers for the stakes, the people said.
A spokesman for Anbang declined to comment. China’s banking and insurance regulators didn’t immediately respond to faxes seeking comment. Spokesmen for Minsheng and Merchants Bank had no immediate comment.
Anbang, an insurer whose meteoric rise came to an abrupt halt after authorities detained chairman Wu Xiaohui in June, had amassed stakes in listed Chinese companies as part of a global deal spree in recent years. Anbang Life Insurance Co owned about 8% of Minsheng’s mainland-listed shares as of June 30, while two other Anbang units collectively hold an additional 11%, according to data compiled by Bloomberg. The company doesn’t own any Hong Kong-listed shares in either bank.
President Xi Jinping and his top economic deputies have vowed to make controlling financial risks their foremost priority, a pledge renewed at the Communist Party’s twice-a- decade leadership congress last month.
The China Banking Regulatory Commission released draft rules on November 16 in an effort to better protect lenders and untangle sometimes complicated ownership structures. A single investor can be a major shareholder in up to two commercial banks, or take a controlling stake in no more than one commercial bank, the regulator proposed. Any stake purchase of more than 5% of a bank’s stock must be approved by the CSRC.
Anbang was among prominent dealmakers including Dalian Wanda Group and HNA Group that landed in Beijing’s crosshairs as the nation’s leadership vowed to snuff out risks in the financial system.
A worker cleans windows of the Anbang Insurance Group’s building in Beijing. The insurer has been asked by Chinese regulators to reduce its stakes in China Minsheng Banking and China Merchants Bank to comply with new rules governing bank shareholdings, according to people familiar with the matter.