Due diligence is key for potential private investors in banks

Private capital will have more access to China's domestic banks, but investors need to be wary of hidden liabilities in target financial institutions. Potential investors should conduct comprehensive due diligence on tax and finance aspects of targets, say counsel.

The China Banking Regulatory Commission (CBRC) is committed to expanding channels for private investment into the domestic banking sector, and has raised the proportion of investment in rural financial institutions. Investors are also encouraged to participate in mergers and acquisitions of rural credit cooperatives. More investment avenues are expected to open, but legal specialists say it is difficult to predict exactly what and how.