China’s state-owned assets regulator SASAC has signalled it could block China Mobile’s plan to buy into a state-owned bank.
Liu Nanchang, the head of SASAC’s general office has told Chinese media that the agency was opposed to state-owned enterprises (SOE) buying into non-core businesses and also to government industrial enterprises buying into banks.
Liu said China Mobile would need SASAC’s clearance to make the deal, the National Business Daily reported.
“We maintain our opposition to central government enterprises expanding into non-core services,” he said.
China Mobile has said it is in talks to buy a stake in the mid-sized Shanghai Pudong Development Bank for as much as 40 billion yuan ($5.9b).
Chairman and CEO Wang Jianzhou has said the two parties are discussing level of investment and price. A “memorandum on strategic cooperation”, share subscription and other documents would be issued shortly, he said.
Another source said no documents had yet been filed with regulators but the deal was in its final stages.
Reportedly China Mobile plans to execute the deal through its biggest subsidiary, Guangdong Mobile, which would theoretically require just the approval of provincial authorities.
However, an official close to SASAC said he was “shocked” by the prospect of an SOE buying into a bank and warned that taking such a circuitous route would prompt SASAC to look at the deal very closely.
SASAC and the Ministry of Supervision jointly issued an “opinion” on the regulation of government enterprises on March 2, stipulating that any acquisition by a SASAC enterprise of more than 20% of a non-core business would require their approval.