The reform plan of China Development Bank (CDB) has been ratified, turning the policy bank to a commercial lender, sources with the country's central bank said.
According to the plan, approved by the State Council in the middle of this month, CDB will go through a series of reforms including restructuring, company management framework adjustment and going public when the time is right.
The plan will soon be released to the public, the China Securities Journal cited the source as saying on Monday. However, no information is available yet about when the conversion will happen.
The move ended a four-year discussion on CDB's commercialization, prolonged by considerations of the bank's special status and low capital adequacy ratio.
CDB is required to set up a stock company within six months after the plan is fixed. Chen Yuan, governor of the lender will probably be the board chairman, Monday's Shanghai Securities News quoted an unidentified industry expert as saying.
After the commercialization, the lender is to expand wholesale banking businesses and market investments besides continuing to support the country's key sectors and priority projects, the source said.
Market analysts said middle- and long-term wholesale loans will continue to be CDB's main business. The bank may not rush into competition with other commercial banks in retailing sector soon because of limited branches and proficiency in doing wholesale banking business.
CDB now owns 32 branches and four representative offices nationwide.
In December, Central Huijin Investment Co., an investment arm of the Chinese government, injected 20 billion U.S. dollars into CDB, sharply raising CDB's capital adequacy and improving its risk-prevention capability.
CDB is one of the country's three policy banks, the other two being the Eximbank and the Agricultural Development Bank. Its main businesses include funding the development of infrastructure, basic industries, pillar industries as well as top-priority State projects.
(Xinhua News Agency February 18, 2008)
