Brazil wants local banks to strengthen China ties

* Brazil gov’t sees opportunities for banks in China

* China limits foreign ownership of lenders

* Move could be bolstered by BRIC links, diplomat says

By Guillermo Parra-Bernal

SAO PAULO, Brazil, April 20 (BestGrowthStock) – Brazil’s government
wants domestic financial groups to strengthen business ties
with China to lower access costs and tap new sources of revenue
in the world’s third largest economy, a top diplomat said on
Tuesday.

One goal of President Luiz Inacio Lula da Silva’s foreign
policy is to engage domestic banks with their counterparts in
China, where securities, loan and trading business are growing
“exponentially,” said Roberto Jaguaribe, a Foreign Affairs
Ministry official in charge of relations with other BRIC
nations, like China. Russia and India are also BRIC countries.

“This is one of the aspects of our state policy of helping
BRIC banks to create closer ties,” Jaguaribe said at an event
hosted by Banco Fator.

“Brazilian banks could benefit from this because, given the
fact that they have no dealmaking tradition in China, they end
up paying some toll fee to a European bank with relations
there,” he added.

Jaguaribe’s remarks come as the United States and other
developed economies are urging the Chinese to let their
currency strengthen. Politicians around the world are partly
blaming China’s currency policies for imbalances in global
trade that are destroying jobs elsewhere.

China has loosened restrictions on foreign participation in
its financial system since the country’s accession to the World
Trade Organization in 2001; yet analysts say regulatory and
legal barriers remain.

Under current legislation, foreign investors are only
allowed to own up to 20 percent of a Chinese bank. Aggregate
foreign ownership in the industry cannot exceed 25 percent.

International banks are allowed to own no more than 33
percent of a securities firm in a system that mimics the
structure of a joint venture.

Jaguaribe did not say whether the two nations and financial
groups were currently holding official talks on the matter.

He noted that China has expressed interest in allowing
foreign lenders to establish operations in Macau, which could
be a boon to Brazilian banks because of linguistic and cultural
links between the two former colonies of Portugal.

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(Reporting by Guillermo Parra-Bernal, editing by Gerald E.
McCormick)

Brazil wants local banks to strengthen China ties