China could reopen the controversial auction for a controlling stake in Guangdong Development Bank after telling the troubled lender it would not change foreign investment rules to approve a bid from a Citigroup-led consortium.

The China Bank Regulatory Commission told GDB of its decision at a meeting yesterday in Guangzhou, capital of the southern province of Guangdong, according to industry executives familiar with the bidding process. A decision to reopen the auction would signal the death knell for the bid by a Citigroup-led consortium that wants 85 per cent of the Chinese lender.