China's private capital has entered every financial field, like
banking, securities, insurance, funds, trust, finance and financial
lease, etc, according to an investigation released in the latest
issue of
New Wealth magazine.
Currently, eight Chinese family firms hold total investment of 8
billion yuan (US$966 million) in financial institutions. Although
most private holding financial institutions are at the bottom of
family companies, they are still tightly controlled by the parent
body or related companies. They have some similarities with other
family firms in Asia.
Banking
Private capital controls 14.6 percent of commercial banks' assets.
Except for the four state-owned banks Industrial and Commercial
Bank of China, Bank of China, China Construction Bank and
Agricultural Bank of China, the private assets in top 10 national
joint-stock banks have totaled 162.8 billion yuan (US$19.7
billion), 6.82 percent of these banks' total assets.
The listed Shenzhen Development Bank, Minsheng Bank, Shanghai
Pudong Development Bank and Merchants Bank have certain stakes held
by public shareholders. Thus, the total assets owned by private
persons have risen to 348.6 billion yuan (US$42.1 billion), 14.6
percent of all joint-stock banks.
Besides, China has over 100 city commercial banks and thousands of
credit cooperatives. The private stakes in these banks are no less
than that in joint-stock banks.
Insurance
Ping'an, Xinhua Life and Hua'an Insurance Co, in which there are
large private shareholdings, had achieved insurance premium of 49.4
billion yuan (US$6 billion) in 2001, 23.4 percent of total national
premiums.
Considering these private stakes, the premium revenue shared by
private capital is 15.53 billion yuan (US$1.8 billion), 7.4 percent
of total. The revenue doesn't include that from the recently
established Minsheng Life Insurance Co and Oriental Life Insurance
Co.; otherwise the market share would be much higher.
Securities
Statistics show private holdings in securities companies have
reached 6.5 billion yuan (US$785 million). Considering other small
stakes, the total capital has exceeded 7 billion yuan (US$846
million), accounting for 13 percent of total registered capital of
104.3 billion yuan (US$12.6 billion).
Currently, it is quite popular for private enterprises to buy
stocks in security companies. In Haitong Securities Co., which has
the largest registered capital, there is 2 billion yuan (US$241
million) of private capital, over 23 percent of its total
registered capital of 8.73 billion yuan (US$1 billion).
Others
After several years' restructuring, only over 40 trust companies
are still in business. Among them, there are three private holding
trust companies and one awaiting approval.
Financial leasing is the most privatized one in all the financial
fields. Private companies control half of the12 financial leasing
companies.
Of
over 70 finance companies in China, only two are privately owned.
With high thresholds set for non-banking financial fields, private
enterprises seldom have the opportunity to enter.
Return
Most private holding financial institutions have limited profits,
for they still need bigger input. However, some of them have begun
to receive good returns.
In
2001, 16 private holding financial institutions suffered no losses.
Ping' an Insurer, for instance, reported net profit of 1.76 billion
yuan (US$212 million)
Of
course, some securities companies, influenced by the gloomy stock
market, suffered huge losses.
Ways of Holding
There are three main ways for private capital to hold a stake in
financial institutions.
The dominant way is to establish or co-establish new financial
institutions, like Minsheng Bank, Taizhou City Commercial Bank,
Xinhua Life Insurance Co.; second, acquire stakes when state
shareholders leave; last, buy more stocks.
(china.org.cn by Tang Fuchun January 20, 2003)