China 'invests in Aussie banks'

China has the world's largest foreign exchange reserves

The agency managing China's huge foreign exchange reserves has bought small stakes in at least two Australian banks, reports say.

The purchases were reportedly made by SAFE investment, a Hong Kong-based subsidiary of the State Administration of Foreign Exchange (SAFE).

Both SAFE investment and SAFE declined to comment, reports said.

The deals were not made via a $200bn sovereign wealth fund, which launched in September to invest overseas.

The fund, China Investment Corporation (CIC), was established to make foreign investments using the world's largest foreign exchange reserves.

Transparency concerns

The Financial Times said SAFE had denied any knowledge of the investments in the Australian banks.

But a Chinese government source said SAFE has long owned the subsidiary in Hong Kong, with investing part of China's rapidly growing foreign exchange reserves of $1.4 trillion (£710bn) being one of the unit's tasks.

Secretiveness of the investments raised concerns about the transparency of China's investment strategy, the newspaper said.

It reported SAFE investment had bought stakes of less than 1% in Australia and New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB).

A spokesman for ANZ and a source in CBA confirmed to the Reuters news agency that SAFE investment held a stake in each bank, while NAB representatives were not available for comments.