The State Council has decided to choose two major state-owned
commercial banks, the Bank of
China and China Construction
Bank, for pilot reform to turn them into joint-stock banks, a
source said Tuesday.
Solely state-owned commercial banks have made great
contributions to the country's economic development, economic
restructuring and social stability over the past years. But they
are sustaining a high ratio of bad assets and low capital
sufficiency, due to structural flaws and some historical
factors.
In recent years, these banks have speeded up reform steps with
the support of the government, and have made marked improvement in
the quality of bank property and profit-making capability, paving
the way for transforming state-owned commercial banks into
joint-stock banks, said the source with the State Council.
The reform aims to turn the two selected banks into commercial
banks in the real sense. They will establish standard corporate
governance and an internal system of clearly defined rights and
responsibilities, as well as a good mechanism for fiscal restraint
and internal risk prevention.
Under the reform plan, the two banks are required to launch
financial regrouping, quicken the pace to solve the problem of bad
assets, increase the ratio of capital sufficiency, lay a solid
financial foundation, and set strict financial standards, the
source said.
After the reform, the two banks would become modern banking
companies, featuring sufficient capital, strict internal control,
safe operations, good service and good economic returns.
The source said the key to success lies in the establishment of
good corporate governance and the transformation of the operation
mechanism. Thus, standard shareholders meeting, board of directors
and board of supervisors will be formed, and domestic and foreign
strategic investors introduced.
?
The State Council has decided to allocate?US$45
billion of the nation's foreign exchange reserve to supplement the
capital of the two banks, while at the same time exercising
stricter external supervision and examination to ensure the safety
of the newly-added capital and good economic returns.
Bank officials responsible for the banks' non-performing loans
will be punished in accordance with related laws and regulations,
as will those who have tried to evade repayment of loans by
fraudulent means, according to the source.
(Xinhua News Agency January 6, 2004)