The Beijing Rural Commercial Bank was unveiled yesterday, a further step by the authorities to try to turn a loss-making sector into profitable financial institutions which can support the nation's rural development.

The bank has been restructured from a rural credit cooperative and has 5.07 billion yuan (US$626 million) in registered capital.

It is the second provincial-level rural commercial bank, following its peer in Shanghai.

Banking authorities are escalating reforms aimed at turning the nation's more than 30,000 rural credit cooperatives, which are mostly unprofitable, into well-managed financial institutions.

The cooperatives are being restructured into commercial banks, cooperative banks or larger credit cooperatives.

A joint-stock reform has substantially diversified the stock structure of the bank, providing a solid basis for commercial operations that place a top priority on profit.

It has 387 corporate shareholders, who together hold a 56.2 percent share of the bank. Individual shareholders, many of them farmers, own the rest.

Currently only one of the board of directors is a farmer, but that number may increase in the coming days, bank officials indicated without elaborating.

The bank is expected to continue to focus on rural areas, farmers and agriculture, which the Chinese Government is trying to support, although the bank is not legally restricted to agricultural loans or rural areas of the city.

"We are going to maintain our original market and customer base," said Jin Weihong, president of the bank. "Supporting rural areas, farmers and agriculture does not mean we cannot make a profit."

The bank is the largest of the rural commercial banks -- which include several provincial and city level banks -- and other regional banks in terms of its capital amount.

Reform measures, including 2 billion yuan (US$246 million) in central bank bills to help write off bad loans as well as efforts to improve management, have already yielded results.

The bank's operating profit came in at 974 million yuan (US$120 million) for the first nine months of this year, up 56 percent from the same period last year.

"All major business indicators are expected to outperform their previous levels, and this year may well be the best year in our history," said Jin Weihong, referring to the Beijing rural credit cooperative's 54 years of history.

Nearly 70 percent of the bank's outstanding loans are agriculture-related. That level is unlikely to see any drastic change in the near future, although the bank will try to target urban citizens and small and medium-sized companies in the city, the official said.

Total assets stood at 123.5 billion yuan (US$15.2 billion) at the end of September, while loans added up to 5.7 billion yuan (US$6.7 billion), up 13 percent from a year earlier, the bank said.

It has almost 700 outlets scattered around the suburbs of Beijing.

(China Daily October 20, 2005)