We are accustomed to shopping in supermarkets to satisfy our
daily needs. Clothes, food, cosmetics, books, home appliances you
name it, they have it.
But have you ever dreamed of a financial supermarket? Money
changers, insurers, securities and fund management companies, all
under the same roof?
Ma Weihua, president of China Merchants Bank, the country's most
profitable lender, yesterday raised a motion in the Fifth Session
of the 10th National People's Congress, pressing for a more
comprehensive management for commercial banks.
The reason is quite simple. With the marketization of interest
rates and more diversified direct financing channels, Chinese banks
cannot rely on the shrinking interest gap between loans and
deposits as its major revenue source.
They have to seek more growth points to drive their profits; and
insurance, funds and securities management, and financial leasing
appear to be perfect alternatives.
Meanwhile, with the opening up of the banking sector last year,
Chinese banks are faced with stiff competition from their foreign
rivals whose parent companies are usually financial holding firms,
and thus excel in offering more product variety.
So Ma Weihua has a good reason to insist that the bar in Article
43 of the Commercial Bank Law, which was imposed in 1995, should be
removed, allowing banks to invest in or take a controlling stake in
non-bank financial institutions with the approval of
regulators.
In fact, the government has given banks the green light to set
up fund management and financial leasing companies. But banks are
now looking for even bolder measures.
The financial supermarket, I believe, is just around the corner.
But good as it sounds, the risks of comprehensive management must
not be underestimated.
How to separate the risks of different units under the same
umbrella will be another big challenge for commercial banks to
manage after the door is pried open.
(China Daily March 8, 2007)