The foreign banks' arrival on the Chinese financial market has
exerted a significant impact on banking management and concept
rather than market share reshuffle as people expected.
Chinese banks have proved to be quick responding to the changed
market conditions and have performed satisfactorily in adapting
themselves to the new conditions.
The four state-owned commercial banks, the mainstream of China's
banking industry, have worked out new reform measures this year,
giving up some traditional ways of management and adopting advanced
business ideas in line with international practice.
People with the banking sector believe the pressure from foreign
banks has not only helped promote China's banking reforms, but also
brought about great changes in traditional banking concepts and
people's ideas about how to manage their finances.
"Different services for different clients" is one of the ideas
Chinese banks have learned from their foreign counterparts and most
China's commercial banks have adopted the system of arranging
managers for specific clients.
The China Construction
Bank announced earlier this month that its president Zhang
Enzhao has taken the lead and will act as chief manager for 10
quality clients. The bank has also arranged chief managers for
1,000 key clients to provide them with the best possible
services.
In
China's large cities and developed coastal areas, many banks have
opened VIP services for key clients.
When Citibank in
Shanghai began to charge a monthly financing service fee of US$6
for deposit accounts of less than US$5000 in March, it set off a
heated debate on whether Chinese banks should follow suit. Although
this debate has come to an end without any result, it will
certainly encourage banks to charge for intermediate business.
Statistics show that large international banks get over 70 percent
of their income from intermediate businesses, while Chinese
commercial banks get only about 10 percent as interest margins
remain the major source of profit for Chinese banks.
Chinese banks have all listed intermediate business as a key area
for development, and so far this year their income growth from
intermediate businesses has mostly exceeded their overall income
growth.
Sources close to the central bank say procedures governing the
charging of intermediate businesses are being formulated and will
be promulgated soon in a bid to promote the development of
intermediate businesses.
Chinese banks have also stepped up their efforts to build good
corporate governance. This year the four state-owned commercial
banks have begun to release information about their major
activities, and for the first time published details of their
assets.
At
the same time, the banks have invited international accounting
firms to audit their assets and look at their methods of
management.
Financial experts hold that with the gradual lifting of business
restrictions on foreign banks, the competition between Chinese and
foreign banks will intensify in China's financial market. The
changing concept of management by China's commercial banks is both
timely and critical to their development prospects.
John J. Mack, CEO of the Credit Suisse-First Boston, said that in
the face of challenges from foreign counterparts, China's local
banks have great advantages in their understanding of the local
markets and their widespread business networks within the
country.
However, local banks lack the necessary understanding of foreign
markets and international rules of practice and in this respect, it
is right for them to learn from their foreign counterparts.
(Xinhua News
Agency August 10, 2002)