China may decide this week to set up a special agency to regulate lenders, the Xinhua News Agency reported, a move analysts said is needed to stop more than UF$357.6 billion in bad loans strangling economic growth.
A meeting from Jan. 22 to Jan. 24 may complete the split of the People's Bank of China, the nation's central bank, into one agency to set monetary policies and another to regulate banks, state-owned Xinhua said. Also on the agenda will be how to accelerate sales of the government's stakes in public companies and allowing insurers to go public.
China, which became a WTO member in 2001, wants to prod the nation's banks, brokerages and insurers to expand their capital, improve their management and prepare for competition with foreign companies such as HSBC Holdings Plc and Citigroup Inc.
The meeting is the "follow-through and part of the policies and initiatives set to reform the Chinese financial services industry," said Wei S. Yen, who tracks China's banks at Moody's Investors Services in Hong Kong.
The meeting will also give approval for China Life Insurance Co, People's Insurance Co of China and other insurers to tap the equity market for capital, Xinhua said. Foreign insurers will also be allowed to expand their operations to more Chinese cities including Beijing and Chengdu, it said.
Foreign companies are moving in. Among insurers, American International Group, Allianz AG and others are vying for a greater share of this growing market against local companies such as China Life and Ping An Insurance Co. Among banks, Citigroup paid about 600 million yuan in December to buy 5 percent of Pudong Development Bank Co, while HSBC bought 8 percent of Bank of Shanghai in 2001.
Liu Mingkang, the Bank of China president who last year uncovered a US$483 million theft at the nation's oldest bank, will be picked to head the new agency, Hong Kong's Oriental Daily said in December.
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