BEIJING, Jan.4 -- The country will retain control of its big State banks to help ensure financial stability, despite efforts to reform the lenders through stake sales and share listings, the Financial News said yesterday.

Domestic banks have been selling stakes to investors as competition heats up ahead of late 2006, when foreign banks gain wider access to the market in line with schedules under China¡¯s World Trade Organization membership.

Central Huijin Investment Co., an arm of the central bank that supervises capital injections for state lenders, still holds more than 70 percent of stakes in Bank of China and China Construction Bank Corp., the newspaper said.

Huijin also holds 50 percent of Industrial & Commercial Bank of China, with the rest held by the Ministry of Finance.

¡°Central Huijin Investment Co. will maintain at least 50 percent of shares in some State banks even if it may transfer or sell more of its shares,¡± the newspaper said, quoting an unnamed senior Huijin official as saying.

¡°This will help guarantee that majority stakes in the banks are firmly in the hands of the State shareholder, which helps safeguard the nation¡¯s financial security,¡± the newspaper said.

The government has injected a total of US$60 billion in foreign exchange reserves into Bank of China, China Construction Bank Corp. and Industrial & Commercial Bank, paving the way for them to bring in strategic investors and launch initial public offerings.

Officials have rejected criticism that the government has been selling banks too cheaply, arguing that such sales are necessary to bring cash and expertise into the banking industry.

(Source: Shenzhen Daily/Agencies)