The Economic Times Saturday, February 09, 2002
China to push sweeping bank reforms this year REUTERS BEIJING: CHINA'S central bank said on Friday it will push the reforms of state banks this year by allowing more of them to list on stock markets and accept foreign investment. The vow came a day after a top financial meeting called by the ruling Communist Party set a blueprint for reforms over the next five years as China adjusts to life as a new member of the World Trade Organisation. China will allow foreign investment in smaller commercial banks, including shareholding and city-level ones, while all banks meeting requirements could list on the stock market, the central bank said in a statement on its Website. It did not spell out what the requirements were. A handful of foreign financial institutions have already taken small stakes in Chinese banks. China has just three domestically listed banks, Pudong Development Bank, Shenzhen Development Bank and private Minsheng Bank. But it has yet to list one of its "Big Four" state-owned banks at home or abroad. The four are Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China. The Bank of China is now preparing to list its Hong Kong operations overseas, although that could be delayed by revelations over problem loans granted under former chief Wang Xuebing. The government is keen to use the market to force ailing state banks to improve management and profits and the central bank said it would require major state banks to cut their non-performing loan ratios by two to three percentage points a year. China says the non-performing loan ratio of the Big Four was around 25 percent in 2001, but foreign analysts say it could be more than 50 percent using Western accounting standards. To help economic development this year, the government would encourage growth in money supply and make "full use" of interest rates, the statement said without specifying how it would do so. The broad measure of money supply, M2, was forecast to rise 13 percent year on year in 2002, the cental bank said. M2 rose 14.4 per cent year on year to 15.8 trillion yuan ($1.9 trillion) in 2001. The central bank would "coordinate domestic and foreign currency interest rate policies and make full use of the function of interest rates as a lever," the statement said, but gave no details. Copyright © 2001 Times Internet Limited. All rights reserved.
