Chinas Financial Development, Reforms and Challenges Chun.pptVIP

* * * China’s Financial Development, Reforms and Challenges Chun Chang Professor of Finance China Europe International Business School China’s Latest Financial Reforms and Development Source: CICC Research The State Council CBRC CSRC Commercial Banks Credit Cooperatives CIRC Trust Investment Securities Firms Exchanges Fund Management Insurance Companies Financial Regulatory Structure China’s Financial System Heavy Reliance on Bank Financing (2006) Source: CEIC; CICC Research China’s Financial System Japan-Germany-like Financial Structure Financial assets concentrated in the banking system No stock markets before 1991 In 2006, more than 80% of financing is still through banks insurance industry is growing fast but still underdeveloped legal framework for private equity financing is just starting China’s Financial System The State’s Dominance of the Banking Industry (Assets, 2006) Source: The Statistics Quarterly PBOC China’s Financial System Banks in China State-owned banks: ICBC, CCB, BOC, CAB Joint stock banks: Bank of Communication, China Merchants Bank, Guangdong Development Bank, Minsheng Bank City banks and credit unions: Bank of Shanghai, Bank of Nanjing, Ningbo Commercial Bank Foreign banks: HSBC, Citibank, Standard Chartered, Progress in Banking Reform Recapitalization of state banks 4 asset management companies set up in year 2000 to take over US$1,600 billion of non-performing loans US$1108 billion NPLs disposed up to March 2006, cash recovery rate 20.8% US$45 billion capital injection in 2004 for BOC and CCB US$15 billion capital injection in 2005 for ICBC CCB listed in Hong Kong in 2005, BOC and ICBC in 2006 Reorganization and recapitalization of China Agricultural Bank and Postal Savings Bank for listing China’s Financial System Progress in Banking Reform (2) Brought in foreign strategic investors before IPO Foreign strategic investors introduced CCB: Bank of America, Asian Financial Holdings (AFH), holding 14.4% BOC: Royal Bank of Scotland, A