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BIZCHINA / Center
Central bank urges State-owned commercial bank reform
By Hao Zhou/Song Hongmei (chinadaily.com.cn)
Updated: 2007-08-28 14:39
The People's Bank of China, or the central bank, announced yesterday that
the reform of State-owned commercial banks will go further to enhance
their competitiveness.
The central bank urged commercial banks to launch a stock incentive
program, according to a document posted on its official website.
According to the document, the program, including staff shareholding and
senior supervisors' stock option systems, is part of an effort to deepen
the reform on human resources management, with an aim to increase
employees' sense of belonging to the company and to attract and retain
employees to serve the bank over the long term.
China Construction Bank (CCB) remains the only one of the Big Four
State-owned commercial banks that has set a stock incentive plan to allow
about 270,000 employees to acquire 800 million of its shares starting
July 6.
It was important to introduce qualified overseas strategic investors,
which helped in forming modern commercial bank management structure and
operating mechanisms, the central bank confirmed while concluding the
reform and reshuffle experiences.
Regarding cooperation with foreign investors, the central bank stressed
commercial banks bring in advanced management experience and expertise as
well as the appropriate financial products, strengthen technical
cooperation in areas such as corporate governance, product research and
financial innovation to improve their credit analysis and risk management
capabilities.
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What's more, while State-owned commercial banks are pursuing reform and
cooperation with overseas financial giants, national interests and
financial security should be the?top concern, said the central bank in
the document.
The country began to overhaul its Big Four State-owned commercial banks
in 2003. Three of them, Industrial and Commercial Bank of China (ICBC),
Bank of China (BOC) and CCB has completed reform and gone public by
October last year.
Earlier this month, Central Huijin, China's State-owned investment
company, planned to inject US$40 billion into the Agricultural Bank of
China (ABC), the only one of the Big Four that remains unlisted as its
historical burden is relatively heavier. The injection would mark a major
step in ABC's shareholding reform. It would raise ABC's capital adequacy
ratio to eight percent, the required ratio for commercial banks in China.
Bank of Communications (BoCom), the country's fifth largest lender, was
also successively listed in the A-Share market in Chinese mainland and
H-share market in Hong Kong.
The document said financial conditions of these commercial banks are
improving. By the end of June, the capital adequacy ratio of ICBC was
13.67 percent, BOC 13.39 percent, CCB 11.34 percent and BoCom 14.17
percent, according to the People's Bank of China.
In terms of net profits, ICBC earned 41.39 billion yuan (US$5.48
billion), BOC 29.54 billion yuan, CCB 34.26 billion yuan and BoCom 8.92
billion yuan.
(For more biz stories, please visit Industry Updates)
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