Banking in China For Women Development Program at Bankseta 9 October 2007

Agenda The History- Single-banking in a planned economy The Present- Multi-Banking and Supervision The Future - Competitiveness, quality and efficiency

History-Milestones In Dec 1948, the People’s Bank of China was established, functioning as central bank and commercial banks On 1 Oct 1949, the People’s Republic of China was founded The People’s Bank of China was in fact acting as a cashier for the Ministry of Finance until the late 1980’s when the banking reforms were launched

History-cont. In the late 1970’s, China launched economic reforms and started to open to the outside world Since the mid of the 1980’s, reforms in banking and finance were initiated with the People’s Bank of China acting as the central bank and the commercial banking activities within the Bank being gradually consolidated and emerged as specialized banks.

History-cont. 4 Specialized banks: Bank of China - foreign trade and foreign exchange Industrial and Commercial Bank of China-( urban industrial and commercial entities) Agriculture Bank of China – agricultural financing People’s Construction Bank of China – changed its name to China Construction Bank, infrastructure financing

History-cont. In mid 1990’s, reforms in the banking industry were reinforced: 1.Specialized banks shifted to commercial banks with overlapping of businesses 2.New commercial banks were established nationwide 3.Entry of foreign banks 4.Establishment of Development Banks 5.Non-bank financial institutions 6.Stock Exchanges(Shanghai and Shenzhen)

History-cont. Breakthroughs were achieved in banking reform when entering the 21 st century: 1.Establishment of China Banking Regulatory Committee(CRBC) in 2003 as the sole supervisor on banks 2.Introduction of international strategic institutional investors into the Chinese banks 3.IPOs by state-owned banks on Hongkong and Shanghai Stock Exchanges

Supervision Evolution Supervision on banks was part of the Central Bank ( the People’s Bank of China) until 2003 Independence of the Central Bank was strengthened with the promulgation of the “Law of the People’s Bank of China” and the commercial banking law in 1995

Supervision Evolution-cont. In 2003, supervisory functions of the Central Bank were consolidated to form China Banking Regulatory Committee(CBRC), with the People’s Bank of China being solely responsible for the monetary policies Separate supervision on banks, insurance companies and securities firms, i.e., independently-established regulatory committees on banks, insurance companies and securities firms On-going communication among the regulatory committees to coordinate the policy initiatives

The Present: Structure of the Banking Industry CBRC State-owned Development Banks China Development Bank Export and Import Bank of China China Agricultural Development Bank State-owned National Banks Bank of China Industrial and Commercial Bank of China Agricultural Bank of China China Construction Bank Bank of Communication Other banks Joint-stock banks(12) City Commercial banks (113) Rural commercial banks(13) Rural Cooperative banks(80) City and rural credit agencies(19426) Postal bank Foreign banks Non-bank FI Financial Assets Management Companies(4) Trust Companies(54) Enterprise Finance Companies(70) Lease Firms(6) Auto Finance Companies(7)

Glimpse of the Banking Industry As of 2006, there were 19,797 banks and non-bank financial institutions (excluding insurance and securities firms), with branches of 183,879 and staff 2,732,394. Top 5 state-owned banks represent 55% of the total assets in the banking industry, with an aggregated assets of RMB22539 billion Top 4 banks are listed on Hongkong and Shanghai Stock Exchanges.

International Presence of the Chinese Banks 25 Chinese banks are listed in Top 1000 global banks by the U.K. magazine “the Banker” Chinese banks are present in 29 countries and regions, with 47 branches, 31 subsidiaries and 12 representative offices Bank of China dominates the international presence among Chinese banks

Bank of China-case study Established in 1912, Bank of China has the longest history among the Chinese banks The most internationally represented bank in China, with presence in 27 countries and regions Bank of China Group is actively involved commercial banking, investment banking and insurance business Being the official banking partner of the Beijing 2008 Olympic games, the Bank is recognized for its expertise and strength Johannesburg Branch was set up in 2000 to promote the economic cooperation between China and South Africa, and to finance the development in South Africa

Foreign Banks in China Branches: 200 in 25 Chinese cities from 74 international banks of 22 countries and regions Subsidiaries: 14 Representative Offices: 242 in 24 Chinese cities from 186 international banks of 41 countries and regions 29 international banks become the strategic institutional investors of the Chinese banks

The Future Reforms in China’s banking industry, which shall be on- going, have brought about the competitiveness, efficiency and quality of the banks’ operation Competition is getting tougher among the banks and from the non-bank financial institutions Banks shall become stronger and healthier

Q & A

Wish you all have a pleasant journey to China

Thank you