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Chinese govt increases stake in banks

Monday 10 October 2011 - by Karina Whalley

The Chinese government has increased its stakes in each of the country's "big four" banks, according reports.

Xinhua news reported on Monday that Central Huijin Investment Ltd, the domestic arm of China's sovereign wealth fund, bought shares in the major Chinese state-owned banks.

The banks include Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank.

"[According to the sovereign wealth fund] the move is aimed at supporting the steady operation and development of major financial institutions and stabilising their stock prices," said Xinhua news.

It is unknown exactly how many shares were bought, but Central Huijin is already the controlling shareholder of all four major banks.

Chinese financial stocks have weakened in recent months due to measures to ease high inflation from an over-heating economy.

The Chinese central bank has raised interest rates three times over the past year and increased the reserve requirement ratio six times over the same period in an attempt to rid the market of excess money supply.

On the news, share prices of all four banks increased at the market's close, while the Chinese stock market closed at a two year low, noted the news agency.

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