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China vows to press ahead state-owned bank reforms
(Xinhua)
Updated: 2006-03-07 09:14
Chinese Premier Wen Jiabao pledged Sunday that China will firmly press ahead
with the shareholding reform of state-owned commercial banks, reiterating
keeping a controlling share in the state's hands.
The premier made the remark in his report on government work, delivered
Sunday at the opening ceremony of the Fourth Session of China's Tenth National
People's Congress (NPC), the top legislature.
"We will introduce advanced foreign management practices, standardize
corporate governance, improve internal control and management, and promote
structural innovations, " Wen said.
"The premier's statements show the state's resolve to overhaul the
state-owned banks," said Hu Pingxi, president of the Bank of China's Shanghai
branch, adding that premier's report also rebuts the doubt that Chinese
state-owned banks are facing the risk of being sold cheaply while introducing
overseas investors.
China will not convert the reform directions for its commercial banks, said
Cao Honghui, with Financial Institute of the Chinese Academy of Social Sciences,
"Yet the government should be ready to tackle problems appearing during the
course of the reforms."
In the new five-year development blueprint delivered Sunday, China's banks
are expected to streamline their operation, upgrade their internal control and
reduce the banks' non-performing loans and banking irregularities so as to
ensure the basic capital and continue their shareholding reform.
The China Construction Bank (CCB) went public in Hong Kong last October, the
first among the country's Big Four state-owned banks to seek overseas stock
market listing.
Two other Chinese banking giants, the Industrial and
Commercial Bank of China Corporation (ICBC) and the Bank of China (BOC) have
already been set for overseas cooperators and are expected to go public this
year.
The government will launch the share-holding reforms of the Agricultural Bank
of China (ABC) this year, the premier said in his government report.
keeping a controlling share in the state's hands is crucial for the big four
banks, namely ICBC, BOC, CCB and ABC, to operate in a sound way, which will
enable them to have a relatively stable shareholding structure, independent
decision-making capacity and stable management mechanism, said Qin Chijiang, an
NPC deputy, noting that the four banks are playing important role on the
financial market as they account for about 70 percent of the country's financial
business volume.
It is a tough task for China's banks to shift into "commercial banks in real
sense," Zhou Xiaochuan, governor of the People's Bank of China, the central
bank, said in a previous address.
Going public will prompt the banks to speed up their reforms, Zhou said,
noting that "There is still a long way to go after public listings."
China promised to fully open its banking industry to foreign competition by
late 2006 under commitments made as a part of its entry into the World Trade
Organization.
Hu Pingxi, also an NPC deputy, said the aim of state-owned banks' going
public is not just for funds, but also for transparency in operation, enhancing
competition capability with overseas rivals, introducing supervision systems and
streamline internal control.
By the end of 2005, 25 foreign investors are reported to have taken stakes in
20 Chinese banks.
A senior official with China's financial department said in a previous
statement that the introducing overseas strategic investors in state-owned banks
will not pose threats to financial security, but will help them to operate
healthily.
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