Lin Chunping, a businessman from Wenzhou, Zhejiang Province, apologized yesterday for exaggerating his "acquisition of foreign banks," in a widely debated case that reflects the problems facing private capital's access to the financial sector.
Lin made a "sincere apology to the public" at a press conference yesterday for his exaggeration of the matter.
He said that despite mounting queries from the public, his plan to acquire overseas banks is proceeding, adding that he is looking at banks in the US and elsewhere.
The businessman did not reveal any information about his planned acquisitions, explaining that according to related legal procedure, no details can be released before a final agreement is reached.
Lin made headlines earlier this year after telling media that he had purchased the "85-year-old Atlantic Bank of America in Delaware" for $60 million.
He claimed that he had formed a new bank after the deal, that it was already turning a profit and would make a net income of $700,000 to $800,000 annually.
The new bank was to be named The USA New HSBC Federation Consortium Inc.
The news aroused heated discussion among the public. A Wenzhou government official praised Lin in the presence of thousands of local businessmen on February 1, saying Lin's experience has shown that "Wenzhou people are born with the wisdom of financiers."
However, Lin's glorious story began to unravel this month with increasing media reports questioning the real existence of the "Atlantic Bank."
According to the Xinhua News Agency, information about the "85-year-old bank in Delaware" could not be found by the US Federal Deposit Insurance Corporation and the Comptroller of the Currency, the two institutions that insure and regulate bank operations.
Officials with the Office of the Secretary of State in Delaware said related documents showed that Lin's "new bank" was registered as a general-purpose company, not a financial institution licensed for banking, Xinhua reported.
Last week, Lin acknowledged that his new company was indeed not a bank, arguing that the Atlantic Bank was just a code name covering up the US company he had actually purchased, as he was not allowed to reveal its true name for the time being.
"Wenzhou businesspeople in China and abroad are in an urgent need of banks operated by Chinese businessmen," Lin wrote on his Sina Weibo account Monday. "My plan to purchase overseas banks will not change."
Zhang Xunting, a publicity official for the city of Wenzhou, said earlier that an investigation might be conducted into Lin's assets in Wenzhou, the Xiaoxiang Morning Post reported.
Zhang said Lin's case had damaged the city's reputation, but noted that Lin's election as a member to the Chinese People's Political Consultative Conference Wenzhou Committee "was in accordance with procedures."
Zhou Dewen, director of the Wenzhou Council for Promotion of Small and Medium-sized Enterprises, told the Global Times that Lin's exaggeration was shameful, but that the case was not representative of the whole Wenzhou business environment.
"Local businessmen had been longing for private capital to be given access to the financial industry. Lin's case will not affect our endeavor to march into the financial sector, and I believe the dream to acquire overseas banks is bound to be realized," Zhou said.
Wenzhou submitted a proposal last year to establish a pilot zone for financial reform and renovation.
Zhou Xiaochuan, governor of the People's Bank of China, said Monday that a consensus on the proposal has been reached to some extent, but that some difficulties still needed to be discussed.
"Lin's case has reflected the bitter reality faced by Chinese private capital," Guo Tianyong, head of the China Banking Research Center at the Central University of Finance and Economics, told the Global Times.
"Due to the cooling down of the property market, the gloomy export perspective and the unclear border between legal and illegal fundraising, the rich have found there are few channels for them to reinvest."
"Chinese banking regulators believe that the risk of allowing private capital into the finance sector is too huge to handle, but I maintain that most investors will see banking as a serious business and will not become speculators," Guo said.
In his government work report delivered to the ongoing National People's Congress session, Premier Wen Jiabao announced that more measures and regulations should be worked out and implemented to allow private capital to enter the railway, energy, telecommunication, education and healthcare industries among others.
"In the long run, I think the mainstream of the financing sector should consist of private capital. It is time for the government to lift its restrictions a little bit to try it out," Guo said.
Xu Tianran contributed to this story