China's four state-owned commercial banks should concentrate on
internal restructuring before going public, said Wang Xuebing,
president of the China Construction Bank.
"The time is not yet ripe for state-owned banks to adopt a
shareholding system,'' he said. "It is unlikely they will be listed
on the stock market in the near future.''
Although going public will help banks meet investors' demands for
profits and transparency, listing cannot be treated as the ultimate
goal of banking reform, Wang said in an exclusive interview with
China Daily.
Listed companies should bring hope to investors instead of bringing
them burdens, he said.
"If I bring the bank to the market, I want to offer an investment
choice with potential of growth and good returns instead of merely
taking money from investors' pockets,'' he said.
If
state banks neglect their internal restructuring and do not adapt
to new business concepts before going public, they could end up
being kicked out of the market, he said.
Since state-owned banks -- the Industrial and Commercial Bank of
China, the Agricultural Bank of China, the China Construction Bank
and the Bank of China -- have been operating under a centrally
planned economy and so often regard themselves as government
organizations instead of commercial banks.
"They have a weak sense of responsibility to their creditors,''
said Wang.
State-owned banks should not only be responsible to their
shareholders and the country, but also to depositors or, in other
words, their creditors, Wang said.
Although China launched reform of its financial sector years ago,
the idea of "being responsible to creditors'' is still not
established, he said.
Time is running out as the banking sector braces itself for the
country's accession into the World Trade Organization (WTO), said
Wang.
Analysts believe entry into the organization will, in time, lead to
a full opening up of the banking industry.
Although the four state-owned banks account for the bulk of the
domestic financial market, they are far less experienced in
management than their counterparts in developed countries.
Wang, who has a dream of building a domestic bank strong enough to
compete with foreign banks across the globe, said the challenge
facing China's state-owned banks is daunting.
But Wang, a sports fan and a bullion and foreign exchange dealer of
22 years, showed his character and his love of challenges.
"Foreign banks are not our enemies,'' he said. "The increasing
number of foreign banks in China after WTO accession will not only
bring competition, but also new business ideas, financial
innovation, new products and management techniques.''
China's state banks will have to reform themselves to build up
their competitive edge, he said.
Since taking his position as president of the China Construction
Bank six months ago, Wang has mapped out a reform plan for the
bank.
The reform strategy will involve the bank's organization framework,
planning management, credit policy, its information and technology
systems, internal controls, human resources and payment
systems.
The bank has restricted and has established four major departments
-- corporate banking, individual banking, real estate credit and
intermediary business.
"We try our best to meet the demands of our clients,'' he said,
"What the clients want is what we will provide. In the past,
clients only enjoyed services which the bank could offer.''
The reshuffle will be completed next year and will eventually
spread to all branches.
China Construction Bank will work out a more concrete strategic
business plan to give it a clearer operational guide, Wang
said.
Human resources reform will be the hard nut during the reform
process because it will break the system of "iron chairs'' for
officials and "iron rice bowls'' for staff, which gives them jobs
for life, he said.
It
is easy to break the "iron chair'' system because the China
Construction Bank has less than 2,000 managers, but it will be more
difficult to break "iron rice bowls'' for the bank's 420,000
employees.
But Wang said this reform did not necessarily mean staff would be
laid off.
"If a company depends on staff reduction to survive, it has few
days left,'' he said. "More people will be retrained and sent to
the marketing department.''
Wang said that entry into WTO will surely lead to the loss of some
talented personnel, "but we do not fear it because it will force
our human resources departments to make efficient use of
personnel.''
Wang said the China Construction Bank will increase cooperation
with other non-banking financial institutions, including insurance
companies, to expand its business.
"We have made strategic alliances with several insurance companies
to share some resources.
"This will not only help our bank generate new business, but also
help insurance companies reduce costs,'' he said.
But this does not mean China's commercial banks will rush to create
a universal banking system in which banks are allowed to provide
other financial business such as insurance or securities.
China has decided to adopt a compartmentalized approach in
regulating different parts of the financial sector. As a result,
financial institutions in one of the three sectors -- banking,
insurance and securities -- can only operate within that designated
sector and are not allowed to merge operations with others.
(China Daily 10/08/2000)