BEIJING, Sept 23 (Reuters) - Chinese financial institutions should look for the right chance to take further stakes in struggling Wall Street banks to beef up China’s global presence, a senior banker said on Tuesday.
Investments in recent years by Chinese banks in U.S. financial firms including Morgan Stanley (MS.N) and private equity firm Blackstone Group (BX.N) have fallen in value as turmoil on global markets has taken it toll.
But Tang Shuangning, chairman of mid-sized Everbright Bank, said Chinese banks should be on the look-out for further investments in the U.S. financial sector.
“The crisis might reduce the influence of the United States in the global market, while China’s voice will grow,” Tang, a former vice-chairman of the China Banking Regulatory Commission, told a financial forum. “We should jump at good opportunities when they emerge to find a way into Wall Street.”
The U.S. Treasury has proposed a $700 billion bailout plan to staunch a crisis that has forced investment bank Lehman Brothers into bankruptcy and Merrill Lynch MER.N into the arms of Bank of America (BAC.N).
Other banks are racing to raise extra capital.
China’s capital controls and the overwhelmingly domestic focus of its banks have largely insulated the country from the immediate fallout of the turmoil on Wall Street.
However, Foreign Ministry spokeswoman Jiang Yu told a regular briefing that Chinese financial regulators would beef up checks to reduce potential risks and would increase contacts with their opposite numbers in the United States.
Fitch Ratings warned on Monday that strains were emerging in the Chinese banking sector despite strong interim profits.
The world’s top-earning bank in the first half was Industrial and Commercial Bank of China, but Chairman Jiang Jianqing said he wanted ICBC (1398.HK) (601398.SS) to be also “the best and most respected bank”.
Jiang said ICBC had done well diversifying its income stream and expanding into overseas markets, and it would keep learning.
“The collapse of Lehman Brothers and other financial giants in the U.S. financial storm has given us a lot of good lessons to learn,” Jiang told the forum at which Tang spoke.
Tang said the financial meltdown was quite likely to evolve into a global economic crisis, requiring China to navigate skilfully to steer the economy into safe waters.
Looking ahead to the customary year-end leadership meeting to set the agenda for the following year, Tang said the setting for monetary policy should revert to “appropriately tight”.
That was how the central bank described its policy until last December, when it adopted a “tight” stance to tackle inflation.
Policy could be further fine-tuned if needed in March when the National People’s Congress holds its annual meeting, he said.
Beijing cut banks’ lending rates on Sept. 15 for the first time since February 2002, and reduced reserve requirements for small banks by a percentage point, the first cut since 1999.
Even though consumer inflation fell to 4.9 percent in the year to August from 8.9 percent in February, Tang said price pressures would persist as the central bank was forced to loosen its grip to boost economic growth.
Tang also suggested the government should set up a buffer fund to stabilise the domestic stock market — a step further than Beijing went last week when it ordered a state investment agency to buy stocks on the open market. (Reporting by Eadie Chen and Zhou Xin; Editing by Alan Wheatley and Lincoln Feast) (firstname.lastname@example.org; +8610 6627 1268; Reuters Messaging: email@example.com))