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China Construction Bank (CCB), one of China's four largest State-owned commercial banks, unveiled a clear timetable for its much-heralded listing plan, in a move to sharpen its competitive edge in the financial market, which is expected to see fierce competition in the coming years.
The listing of the financial giant will involve a gradual flotation by stages over a time span of four or five years, with part of the bank's assets to be listed on the market as the first step in the giant move, said senior officials with the bank.
Following a successful restructuring, other assets will be gradually transferred to the listing until the process is complete, said Zhang Enzhao, vice-president of the bank.
Until 1999, Zhang was president of the bank's Shanghai Branch, which developed most of the bank's market-oriented operations, including many of the bank's latest products and principles of operation.
CCB is the first among the four State-owned commercial banks to outline in detail a blueprint for its reform target. The other three banks in the group are the Bank of China, the Industrial and Commercial Bank of China and the Agricultural Bank of China.
These three banks are also busy preparing for the same final goal of public flotation to diversify their shareholding structures and improve operating efficiency. The Bank of China has already successfully finished the restructuring of its operations in Hong Kong, and the listing of these banks is not, it seems, very far off either.
It is reported that the delay of the central government's Financial Conference from late this year to early next year is also partially targeted at mapping out detailed guidelines for the reform of China's insolvent banking system, mainly the Big Four.
"Our final goal is to establish a modern commercial bank with good corporate governance that will allow us to become a strong player in the global financial market," said Zhang, at a recent economic gathering highlighting China's economic growth prospects.
This year the bank has been busy restructuring its internal operations in a move to eliminate bad loans and improve efficiency, according to Wang Xuebing, president of the bank, in an earlier interview.
Other work also on the bank's agenda includes analysis and diagnosis of the mega-reform plan, structural reformation and the establishment of a framework for the bank's future development.
"We are aiming at mapping out an overall reform plan and follow-up structural and framework adjustment for the reform of the company within one year's time," said Zhang.
Following the move, a core business system, together with a database that covers all the data within the bank, will also be established within two to three years, as prerequisites for the final stages of the tough reform.
Compared with their foreign rivals, China's largest four State-owned commercial banks shouldered heavy policy burdens in the past decades that have left them with a mammoth pool of bad loans.
Experts warn that the quality of the bank's assets should be much improved and its bad-loan ratio much decreased before the company's public flotation campaign for entry into the equity market.
Earlier statistics show that about 26.6 percent of the loans within the largest four State-owned commercial banks are non-performing, and a large percentage may not be recoverable.
To reduce this huge pool of bad loans, four asset management companies were launched in late 1999 to receive and dispose of the non-performing assets, and some of these assets have already been recovered.
Zhang declined to further elaborate on the plans for the much-awaited listing and the total amount of funds that the bank is to raise from the market.
"Our bank will incorporate advanced expertise and technologies into our practices in the domestic market," Zhang said, adding that the bank is to provide more market-oriented individualized services to its customers in the years to come.
(Business Weekly December 18, 2001)
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