Bank of Communications gets nod for mixed ownership reform

Bank of Communications said the State Council approved the company's plan to introduce private capital, a move that marks the deepening mixed ownership reform within the industry. [Photo / IC]

Bank of Communications, China's fifth-largest lender, said the State Council approved the company's plan to introduce private capital, a move that marks the deepening mixed ownership reform within the industry.

The financial institution will use strategic investors, and explore shareholding by senior management and employees, while retaining its State-controlled status, it said in a statement to Hong Kong and Shanghai exchanges on Tuesday.

It also pledged to deepen the reform of human resources, remuneration and assessment, and enhance internal monitoring, according to the announcement.

The plan is stronger than expected, and the financial reform will continue to be a market catalyst, said Lin Yuanyuan, analyst with Haitong Securities, in a note on Tuesday. The brokerage recommends overweighting to the banking sector.

The Finance Ministry owns 26 percent of the bank, and eight out of its top 10 shareholders have a State-owned background, according to the research note.

The announcement on Monday did not elaborate on the details of the mixed ownership procedures.