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“The banking sector is entering a critical stage and it is important it is healthier,” Wang warned. The Commission has focused attention on helping China ’s banks to improve their game, but Wang appealed for the “support and patience” of the international community.
The Bank of China embraced the path of reforms one year ago, noted Li Lihui, Vice-Chairman and President, Bank of China, People’s Republic of China, and “with good services and products, we can adapt to the competition.” He outlined a raft of reforms the bank has undertaken including “financial re-engineering where non-performing loans (NPLs) have reached preliminary state requirements; the adoption in 2004 of the latest accounting rules in line with international standards and we have adopted an independent internal review system.” The BOC has also centralized its loan-granting facility and says it is on track to “hopefully issue an IPO in the first half of next year,” Li said.
Yang Kaisheng, Vice-Chairman, Industrial and Commercial Bank of China , People's Republic of China , also used the platform to detail his bank’s reform process. “Bad loans have been completely removed from the balance sheet and we are prepared in the next month to create the stockholding company and then hasten the preparation – at the appropriate time – for an IPO next year,” he said.
“Without opening the Chinese market, there would never have been the reform process which makes our economy more open and so it is a benign circle,” said Xu Xiaonian, Professor, Economics and Finance, China Europe International Business School (CEIBS), People's Republic of China . Nevertheless, as the reforms progress apace, he pointed out that certain cultural habits would be harder to shake off. “I think banks will find it hard to constrain political interference but the introduction of foreign partners will usher in a new credit culture,” he said.
Foreign banks with stakes in Chinese banks will “provide experience and expertise in lending and competition which will result in better services for customers because that can only help us move forward,“ said William R. Rhodes, Chairman, Citibank and Senior Vice-Chairman, Citigroup, Citibank, USA.
“For Chinese banks and the investors coming in it’s a win-win situation. We learn advanced management and they have access to our market,” argued Yang. Chinese banks will still have the advantage when the doors are open to foreign investors. Given their customer base and network of tens of thousands of branches, it will take the outside competitors time to set up shop. “I think China will have a big advantage… but no doubt the Chinese banking system will be responsive to opening up after the WTO… and the customer will ultimately benefit the most,” Yang said.
The World Economic Forum, which has been engaged in China for over 25 years, opened its China Business Summit 2005 in Beijing today. Organized in collaboration with the China Enterprise Confederation (CEC) and with the support of the National Development and Reform Commission, it is the premier annual gathering of Chinese and international business leaders with over 600 participants from 35 countries participating at this year’s Summit .
