China to introduce shareholding system into agriculture bank
5/3/2008 16:39
China will continue deepening the reform of banking industry this
year, with focuses on the introduction of a shareholding system in Agricultural
Bank of China (ABC) and the reform of China Development Bank (CDB), Premier Wen
Jiabao said today.
"We will speed up reform of the financial system and
strengthen financial oversight," said Wen while delivering a government work
report at the First Session of the 11th National People's Congress, the top
legislature.
In early February, ABC spokesman Zhou Qingyu said the bank would
go public "at an appropriate time" after it finishes the financial
restructuring, as well as incorporation, and introduces strategic
investors.
"It could be any time in the next three years," he said.
The
bank reported a profit of 96 billion yuan (about US$13.3 billion) last year, up
64 percent from 2006.
In 2007, the ABC's deposit business increased 549.7
billion yuan, while its loan business increased 330.4 billion yuan. It also
cleared 57.4 billion yuan in bad loans.
A reform plan of the CDB ratified by
the State Council in mid-February will turn the policy bank to a commercial
lender, earlier reports said.
According to the plan, the CDB will go through
a series of reforms including restructuring, company management framework
adjustment and going public when the time is right.
The move ended a
four-year discussion on the CDB's commercialization, prolonged by considerations
of the bank's special status and low capital adequacy ratio.
The CDB is
required to set up a stock company within six months after the plan is fixed.
Chen Yuan, governor of the lender, will probably be the board chairman, reported
by Shanghai Securities News.
After the commercialization, the lender is to
expand wholesale banking businesses and market investments besides continuing to
support the country's key sectors and priority projects, the source
said.
Market analysts said middle- and long-term wholesale loans will
continue to be the CDB's main business. The bank may not rush into competition
with other commercial banks in retailing sector soon because of limited branches
and proficiency in doing wholesale banking business.
The CDB now owns 32
branches and four representative offices nationwide.
In December, Central
Huijin Investment Co, an investment arm of the Chinese government, injected
US$20 billion into the CDB, sharply raising its capital adequacy and improving
its risk-prevention capability.
The CDB is one of the country's three policy
banks, the other two being the Eximbank and the Agricultural Development Bank.
Its main businesses includes funding the development of infrastructure, basic
industries, pillar industries as well as top-priority State projects.
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