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BoC chief defends foreign banks' presence
Richard McGregor from Beijing and Francesco Guerrera from Hong Kong, FT Syndication Service

The president of Bank of China (BoC) has defended the presence of Royal Bank of Scotland and Temasek as strategic partners amid controversy over their investments in China's third-largest lender.
In an interview with the Financial Times, Li Lihui argued that Temasek, the Singapore state investment agency, and Royal Bank of Scotland, the UK bank -- which will invest a combined US$4.7bn ahead of BoC's US$8.0bn overseas listing next year -- would help with a radical overhaul of the state-owned bank's systems and operations.
"Temasek have been quite successful in making investments in quite a number of countries and have been instrumental in reforming and renewing banks that have been slightly problem-ridden," Mr Li said.
"RBS is a very famous and very well-run European bank ... with a lot of experience in different areas such as product control and risk management," he added.
Mr Li's comments coincided with criticism in the local Chinese media over the handling of the sale of the stakes to the two groups.
Senior officials and the media had criticised Central Huijin Investment, holding company for the state's stakes in the "big four" banks, for granting RBS the right to compensation if BoC fails to meet certain financial targets. The UK bank is buying a 5.1 per cent stake for US$1.6bn at the head of a consortium that is taking a 10 per cent stake.
A local magazine last week reported that Central Huijin had opposed approval of Temasek's US$3.1bn purchase of a 10 per cent stake in BoC amid fears about the further involvement of the Singapore government agency in Chinese banking.
However, Mr Li said the deals with RBS and Temasek were "in line with international best practice".
Mr Li said the regulatory approval process "might take a bit of time", and that there would be no more foreign investors on top of Temasek and the RBS consortium, as well as UBS and the Asian Development Bank -- which are to take about 2.0 per cent each.
BoC plans to raise about US$8.0bn in next year's IPO, about the same as the amount raised recently by China Construction Bank (CCB), the first of the country's big four state lenders to go public overseas.
Li said BoC had largely achieved the financial targets it had set itself to prepare for the listings, boosting capital adequacy above 10 per cent by the end of last year, cutting the bad loan ratio to 5.12 per cent and achieving a return on equity of 10.4 per cent.
"We regard the IPO not as our destination, but as a bus stop by means of which we can move further towards our destination."