Global Capital Markets

China may remove limits on foreign investment in domnestic commercial banks as early as after the lunar new year, the International Finance News reported. The newspaper said that the China Banking Regulatory Commission (CBRC) plans to amend its policy on foreign holdings in China's commercial banks, paving the way for the opening of the financial sector in line with WTO commitments. The report added that HSBC may consider raising its stake in China's Bank of Communications above 20 pct once the rule change is in force. HSBC paid 14.46 bln yuan for a 19.9 pct stake in the Bank of Communications in August 2004. China's Ministry of Finance is the bank's largest shareholder with a 22.2 pct stake. Current regulations limit foreign stakes in local banks to 20 pct for a single investor, and 25 pct for all foreign investors. A Citigroup led consortium, however, is expected to gain formal approval for its nearly three bln usd bid for an 85 pct stake in China's Guangdong Development Bank. The report said this reflected the government's effort to attract foreign players to participate in China's financial reform. (1 usd = 8.1 yuan) zachary.wei@xinhuafinance.com wzy/gf/tr