Clouds over Citigroup bid

Foreign investors are unlikely to be allowed to purchase controlling stakes in its small and medium-sized banks, threatening a Citigroup-led consortium's bid for an 85% stake in Guangdong Development Bank, state media reported, citing a source close to the banking regulator. China currently restricts foreigners to a maximum of 25% equity, with individual investors capped at 20%, but the Citigroup consortium was hoping to receive an exemption. "The case of Guangdong Development Bank has been looked into many times by the China Banking Regulatory Commission (CBRC) and other related administrations, and it is hard to break the present restrictions on foreign strategic investor issues," CBRC said in a letter to the Guangdong Municipal Government, which is thought to be supportive of the deal. If Citigroup wins the bid, it would become the first overseas investor to buy control of a state-owned bank in China.