China Bank Regulators To Prove Lenders, PE Firm Cooperation

(Reuters) – China’s banking regulator plans to launch an investigation into lenders’ cooperation with private equity firms, to ensure banks have taken adequate measures to ward off risks, the China Business News reported on Friday.

The China Banking Regulatory Commission (CBRC) held a meeting last week with banks to gather information on their private equity business, including how they restrict their exposure to the sector, coordinate conflicts of interest and balance risks and returns in such cooperations, the newspaper said.

It cited unamed sources familiar with the situation.

Commercial banks typically channel money into private equity funds via trust and wealth management products, as well as through direct lending, the newspaper said.

Chinese banks including Bank of China (3988.HK)(601988.SS), Industrial and Commercial Bank of China (1398.HK)(601398.SS), China Construction Bank (0939.HK)601939 and Bank of Communications (3328.HK)(601328.SS), have all set up private equity funds through their Hong Kong units.

(Reporting by Melanie Lee and Samuel Shen; Editing by Jacqueline Wong)