China says may relax foreign ownership controls on financial firms - statement

HONG KONG (Reuters) - China may allow foreign investors to hold controlling stakes in mainland securities, fund management and insurance companies, the Chinese and British governments said, underlining Beijing's commitment to opening up the mainland capital markets. Permitting foreigners to hold controlling stakes in domestic financial firms would be a game-changer, handing global banks and asset managers more power to make business decisions and drive the direction of their mainland joint ventures. The announcement was made on Thursday by the Chancellor of the Exchequer Philip Hammond and Chinese Vice Premier Ma Kai as part of the annual UK-China Economic and Financial Dialogue that aims to deepen economic and financial ties between the two countries. "China commits to gradually raise the permitted equity holding of qualified foreign financial institutions in securities and mutual fund companies," they said, adding the China Insurance Regulatory Commission was "willing to work towards increasing foreign ownership of life insurance companies conducting business in China". The statement did not provide any further details on the potential rule changes. China has gradually been relaxing restrictions on Sino-foreign joint ventures and has created more channels for foreigners to buy Chinese stocks, bonds and launch fund products onshore. Foreign investors are currently allowed to hold a maximum 49 percent stake in mainland mutual fund and securities brokerages, while they can hold up to 50 percent of life insurance companies. The two governments also committed on Thursday to implement a proposed London-Shanghai equity link, while several Chinese banks will establish operations in the UK as part of the agreement. (Reporting by Michelle Price; Editing by Biju Dwarakanath)