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ECON 2130 Banking Industry in China

ECON 2130 Banking Industry in China. Ngai Lo Fan 08035091 Lau Chun Yip 08027498 Lee Yuen Ling 08026335. Introduction. China's banking system has undergone significant changes in the last two decades Banks in china are now functioning more like banks than before

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ECON 2130 Banking Industry in China

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  1. ECON 2130Banking Industry in China Ngai Lo Fan 08035091 Lau Chun Yip 08027498 Lee Yuen Ling 08026335

  2. Introduction China's banking system has undergone significant changes in the last two decades Banks in china are now functioning more like banks than before China's banking industry has remained in the government's hands even though banks have gained more autonomy China's accession to WTO will lead to a significant opening of this industry to foreign participation

  3. Banks in China Central bank : People's Bank of China “Big four" state-owned commercial banks: Bank of China the China Construction Bank the Industrial and Commercial Bank of China the Agricultural Bank of China

  4. Central Bank The People's Bank of China (PBOC) formulating and implementing monetary policy. Maintaining the banking sector's payment, clearing and settlement systems. manages official foreign exchange and gold reserves. oversees the State Administration of Foreign Exchange (SAFE) for setting foreign-exchange policies

  5. China Banking Regulatory Commission (CBRC) (launched on April 28, 2003) to take over the supervisory role of the PBOC. Goal: - improve the efficiency of bank supervision - help the PBOC to further focus on the macro economy and currency policy. Mission: - maintain a safe and sound banking system in China

  6. CBRC is responsible for the regulation and supervision of - banks - asset management companies - trust and investment companies - other deposit-taking financial institutions.

  7. Big Four Bank of China specializes in foreign-exchange transactions and trade finance listed on the Hong Kong Stock Exchange since 2002 The USD2.8 billion offering was over-subscribed by 7.5 times a significant move in the reform of China’s banking industry Compared to the first nine months of 2009, the Group’s net operating income before impairment allowance decreased mildly mainly attributable to the decline in net trading gain Setoff by increase in both net interest income, net fee, commission income. Operating expenses ↓ Net interest income increase slightly year-on-year Driven by the expansion of average interest-earning assets increase in loans and advances Increasing securities investments However, the increases was partially offset by the narrowing of net interest margin under the decreasing interest rate environment.

  8. Big Four China Construction Bank Specializes in medium to long-term credit for long term specialized projects such as infrastructure projects urban housing development Net profit attributable to equity shareholders of the bank - RMB 110,499 million or - RMB 0.37 per diluted share up by 28.31% over the same period last year. Net interest income and net fee and commission income increase significantly while impairment losses decreases over the same period last year.

  9. Big Four Industrial and Commercial Bank of China largest bank in China by total assets, total employees and total customers Different from the other State Owned Commercial Banks by being second in foreign exchange business 1st in RMB clearing business used to be the major supplier of funds to China's urban areas and manufacturing sector It overcame the crisis In 2009 by - taking steps in business re-orientation and service innovation - maintaining good portfolio balance and cost control

  10. Big Four Agricultural Bank of China specializes in providing financing to China's agricultural sector It offers: - wholesale and retail banking services to farmers - township and village enterprises (TVEs) - other rural institutions the last of the “big four” banks in China to go public.

  11. It became the world's biggest initial public offering (IPO) surpassing the one set by Industrial and Commercial Bank of China in 2006 of US$21.9 billion in August 2010 . • On August 13, 2010, it officially completed the world's largest initial public offering, raising a total of $22.1 billion after both Shanghai and Hong Kong's over-allotments were fully exercised.

  12. Future Development change from mainly statistical or accounting reporting to more customer-eccentric business approach - helps those banks to adopt flexible architectures - keep improving their business.

  13. In the past two years, the Chinese government carried out most of the stimulus policies through the banking sector. - let the banking sector having more opportunities to make new loans. - stimulates the loan business of china’s bank.

  14. Most of the large China’s banks has expanded into overseas markets - it enlarge the business opportunity in the global market. - the China’s market also creates opportunities for foreign banks and financial institution.

  15. In the future (China) • the credit and debit card services will be a big important elements . By the end of the Q1, 2009, about 1.74 billion debit cards and 150.5 million credit cards was issued. • Business opportunity of credit card services market is very large since: • the consumption level of general public is getting higher • the Chinese government will try to overcome the current difficulty e.g. difficulties in providing personal credit information for banks, lacking merchant acceptance

  16. Recently, Chinese government is going to implement tight monetary policy because: • try to control the housing price • penetrate the bubbles in real estate industry • Increasing reserve ratio on Nov. 19th 2010 . • The bank industry should change the business pattern from numerous real estate loans to a new pattern under the tight monetary policy for making the growth smoothing • Opportunities for the bank industry: - the potential credit card business and global business. - help from the Chinese government for the big government-owned company → guarantee the banks run on a smooth way.

  17. Electronic banking China started the Golden Card Project (1994) - enabling cards issued by banks to be used all over the country through a network. The China Association of Banks : - promoted the inter-bank card network and by the end of 2004, - the inter-region-inter-bank network had reached 600 cities, including all prefecture-level cities and more than 300 economically developed county-level cities.

  18. THE END

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