While the bank did not give any details about the possible reform in its filing, it stated that the government would retain control of BoCom that is considered to be China’s fifth largest bank by assets.
HSBC is the biggest foreign shareholder in the bank and owns 19% while the government owns 27% of the bank’s shares.
The approval comes in the midst of a difficult year by Chinese financial institutions. The country’s gross domestic product expanded at its slowest speed in the last 24 years.
The bad performance of the construction and manufacturing sector resulted in the slowest quarterly growth in the first three months since the 2008 financial crisis.
As cited in The Financial Times, the bank said it will also explore the feasibility of mixed ownership through employee shareholding plans and incentivising employees through stock options.
BoCom was one of the first banks among the five state-owned banks to introduce reforms under Beijing’s two-year-long overhaul of its suffering state-owned enterprises.
Most companies have introduced mergers and restructuring and brought in more non-state investors to implement more diversified ownerships.
Image: The Chinese government owns 27% of the Bank of Communications. Photo: courtesy of ShingWong~commonswiki.
