The watershed of China’s banking reform
The start of 2004 did not look promising for the cause of Chinese banking reform. State banks, many wallowing in bad debts, were engaged in a lending frenzy that even the pro-growth Communist party worried might result in a meltdown.
But after an inauspicious start, the credit splurge has been tempered and so many long-awaited reforms launched that 2004 could yet be regarded as a watershed for the overhaul of one of the Chinese economy's weakest links.
“We have never seen such a rapid change in Chinese banking history,” says Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC). At the same time, he says much hard work remains to be done.
Landmark changes this year have been manifold. Lending rates were liberalised in October, one large state bank is in the midst of a groundbreaking governance overhaul, authorities have recently approved banks to enter the fund management business and new private banks have beenset up.
But Mr Liu uses the improvement in banks' capital adequacy ratios (CAR) as a general indicator on the growing strength of the financial sector.
He says by the end of this year the number of banks able to reach the international standard of 8 per cent CAR will have risen by 11 to a total of 19.
CAR is regarded as crucial because all Chinese banks have been ordered to comply with the 8 per cent standard required by the Bank of International Settlements in Basle, Switzerland, by 2007. It is also important because under rules announced earlier this year, banks with sub-standard CARs have to put more funds on reserve at the central bank thereby hobbling their growth.
The focus on CAR hasalso been powerful in reining in banks' lending activities this year because the ratio of capital to assets declines as lending increases and Chinese banks need regulatory approval to issue subordinated debt to top up their CAR.
Mr Liu says lending has been brought under control following last year's frenzy. “Credit expansion since the second quarter [of this year] has been steadily keeping a level of 13.3 to 13.9 per cent,” he says.
“One thing I can guarantee: Chinese banks will never be crazy,” he adds. “In the next three to four years with CAR and risk management we can see the credit expansion speed will be 13 to 16 per cent. I am quite comfortable with that.”
Ensuring the quality of these new loans is a separate task, the importance of which is emphasised by banks' historical legacy. Mr Liu says investment into “redundant projects” those that fall foul of land, environmental and other regulations is estimated at Rmb800bn ($97bn, �75bn, ￡52bn), some Rmb300bn of which comes from bank lending.
As the economy cools, banks will have to increase provisioning against such loans turning bad, an imperative that will further impel them to focus on profitable activities, Mr Liu says.
The regulatory squeeze on banks ordered since the CBRC was established in early 2003 has prompted some lenders to overhaul their management and staffing policies.
Bank of China (BOC), one of two large state lenders that hopes to list on the Hong Kong stockmarket, is engaged in far-reaching changes that will see each of its 230,000 staff reapply for their positions.
Following the reform, the current civil service-style pay scale will be replaced by a performance-based system that will reward staff for prudent lending over those whose decisions result in bad loans, says Zhu Min, Bank of China's executive assistant president.
Reinforcing the pressure for better governance is CBRC's decisions to approve the entry of several foreign competitors to take stakes in domestic banks. Mr Liu says nine more foreign banks are in line for permission to team up with domestic counterparts, in addition to the nine already approved.
Private banks too are starting to gain a foothold. Bohai Bank, a private lender based in the northern city of Tianjin, recently won regulatory approval, Mr Liu says. In addition, several former Rural Credit Co-operatives have transformed themselves into private banks serving mainly rural clients. Private equity companies such as Zhongrui Caituan, a fund based in the east coast boomtown of Wenzhou, are also being given the green light, says Mr Liu, as long as they desist from public placement and use private placement to raise funds.
The last breakthrough reform was the shift in October to allow banks full freedom in setting their lending rates, abolishing the central bank's remit to set a fixed lending rate. A similar reform will eventually be applied to banks' deposit rates but the upper limit on deposits will be maintained for some time, officials say.
Given flexible lending rates, Chinese banks will for the first time be able to price their loans to reflect the risk profile of the borrower. This, it is hoped, will convince loan officers long accustomed to the mores of socialist banking to analyse the risk inherent in each project and lend accordingly.
中国银行业的分水岭
对中国的银行业改革事业来说，2004年年初的形势看上去不容乐观。国有银行沉浸在放贷狂热中，尽管其中许多已深陷坏账泥沼。就连支持经济增长的共产党也开始担心，这种狂热会导致银行业的崩溃。
但在这个不祥开端之后，大肆放贷现象得到缓和，而且许多期待已久的改革开始推行，使2004年成为银行业（中国经济中最薄弱的环节）改革的一个分水岭。
“我从未看到过中国银行业出现如此迅速的变化，”中国银行业监督管理委员会(CBRC)主席刘明康说道。他同时表示，还有许多艰巨的工作要做。
今年里程碑式的变化发生在很多方面：贷款利率在10月份被放开；一家国有大银行正在公司治理领域进行划时代的整顿；当局最近批准银行涉足基金管理业务；一些新的民营银行已经设立。
但刘先生认为，银行资本充足率提高是金融行业日益强壮的总体指标。
他表示，到今年年底，达到8%国际资本充足率标准的银行数量将增加11家，总数达19家。
资本充足率被视为一个至关重要的指标，因为中国所有银行都被要求在2007年前达到8%的标准，这个标准是位于瑞士巴塞尔的国际清算银行(Bank of International Settlements)规定的。资本充足率的另一个重要之处在于，根据今年早些时候颁布的规定，资本充足率不达标的银行必须向中央银行交纳更多的存款准备金，这样就会牵制它们的发展。
今年约束银行放贷活动时，对资本充足率的关注也发挥了强大的作用。因为随着放贷增加，银行资本对资产的比率就会下降，而银行需要获得监管部门的批准，才能发行次级债券来让资本充足率达标。
刘先生表示，继去年的放贷热潮之后，银行放贷已在控制之下。“今年第二季度以来，信贷扩张速度一直稳定在13.3%至13.9%的水平，”他说道。
“有件事我可以保证：中国的银行永远不会发疯，”他补充说，“今后三到四年中，鉴于资本充足率要求和风险管理，信贷扩张速度将控制在13%至16%。我对此非常满意。”
确保这些新贷款的质量是另一项任务，银行的历史问题突出了此事的重要性。刘先生说，违反土地、环境和其它法规的“重复项目”上的投资估计为8000亿元人民币(合970亿美元)，其中大约3000亿元人民币来自银行贷款。
刘先生表示，随着经济降温，银行必须增加预防这些贷款变成坏账的准备金，这一规定将进一步迫使银行把注意力放到赢利的业务上去。
自从2003年初中国银监会成立以来，监管部门给银行下达的信贷收缩措施，已促使一些银行全面整顿其管理和人员安排政策。
中国银行(BOC)是两家希望在香港股市上市的国有银行之一，该行正在实施影响深远的改革行动，其23万名员工将重新申请各自的职位。
中国银行行长助理朱民表示，该项改革之后，现有的公务员式薪金级别，将被基于业绩的制度取代，该制度将奖励审慎贷款的员工，而不是那些因决策失误导致坏账的员工。
中国银监会决定批准几家国外竞争者参股国内银行，这加大了要求银行改善公司治理的压力。刘先生表示，除了已获批准的9家外国银行之外，另有9家外国银行即将获准与国内银行开展合作。
民营银行也开始获得立足之地。刘先生说，渤海银行(Bohai Bank)最近获得监管部门的批准成立。这是一家民营银行，总部位于华北城市天津。除此之外，几家前农村信用合作社已转型为民营银行，主要为农村客户服务。刘先生说，私人股本公司也被开了绿灯，只要它们不用公募而使用私募方式来筹措资金，如中瑞财团(Zhongrui Caituan)，该基金位于东部沿海的繁荣城市温州。
最后一项突破性改革是10月份的一次政策调整，允许银行完全自由地决定贷款利率，废除了央行设立固定贷款利率的权力。一些官员表示，银行存款利率最终也将进行类似的改革，但存款利率的上限还将保持一段时间。
借助灵活的贷款利率，中国各银行将第一次能够根据借款者的风险状况为各项贷款定价。人们希望，这将说服习惯于社会主义银行业操作方法的贷款官员分析每个项目的内在风险，并相应进行贷款
