Smaller Lenders Lose Luster
- What happened to the once-proud models for successful bank reform in China?
Two years ago China's second-tier so-called shareholding, or commercialized, banks were hailed as everything that the country's big four state banks weren't: nimble, debt-light, market-savvy institutions wooed by foreign investors.
Now those same banks have been soiled by corruption scandals, stalled and soured foreign-investment deals, and a 470 million yuan ($56.8 million) increase in the total amount of bad loans in the first three months of 2004.
Last week, hours after Shenzhen Development Bank Co. announced that it had approved a long-delayed 18% ownership share by U.S. investor group Newbridge Capital Ltd., China's bank regulator warned that Shenzhen Development Bank and China's 10 other second-tier banks were teetering toward collective insolvency.
Total liabilities of those 11 banks stood at four trillion yuan at the end of April, just a hair below total assets of 4.15 trillion yuan.
Listed Shenzhen Development Bank is considered a star performer among its peers, whose strong, rapidly expanding local networks are coveted by foreign institutions just entering the China market.
But shoddy credit-risk-management standards and reckless expansion are making the second-tier banks increasingly unstable, China Banking Regulatory Commission Vice Chairman Tang Shuangning indicated.
That's bad news for foreign investors pursuing stakes in China's smaller banks as a relatively safe means to gain fast-track access to the financial industry.
Realistic Understanding of Risk
"Now we can see there are actually no 'good' banks in China," said Arthur Lau, director of research at Barclays Capital. "It gives investors a more realistic understanding about the risk of investing in Chinese banks."
Still, some analysts said, the massive market potential of China's second-tier banks is likely to continue to draw foreign investors, at least for the foreseeable future. "Everyone sees the tremendous growth opportunities out there, and what it takes is superior management and risk control, which investors can bring in," said Goldman Sachs (Asia) Managing Director Fred Hu.
Already, China's second-tier banks have been the target of major foreign investment, including Citigroup Inc.'s 4.6% share in Shanghai Pudong Development Bank and Hang Seng Bank Ltd.'s 24.98% stake in Industrial Bank in southern Fujian province. Hang Seng Bank is a Hong Kong-listed unit of United Kingdom-based HSBC Holdings PLC.
Partnerships with domestic banks allow foreign institutions to skirt regulatory limits they face in entering the China market solo. Those restrictions include a one-year waiting period for a branch license and a ban on conducting full-yuan business that won't be lifted until the end of 2006 under China's World Trade Organization commitments.
Mr. Tang's warning could spook potential investors still reeling from a fraud scandal that erupted in February at the longtime poster child of successful bank reform in China, China Minsheng Banking Corp.
Although Minsheng late last month issued the results of an independent probe that judged the fraud "an isolated incident" and proceeded to apply for a listing in Hong Kong, the incident has raised awkward questions about the integrity of the second-tier banks.
"Minsheng and its peers ... share a credibility problem [and] they need to work very hard to restore credibility and win back [investor] confidence," said Mr. Hu of Goldman Sachs. That credibility gap has been exacerbated by second-tier banks' rising bad-debt levels.
The second tier's average nonperforming-loan ratio of 7.12% at the end of March was a fraction of the 19.15% bad-debt ratio of China's big four state-owned commercial banks in the same period. But official statistics indicate that state banks have made slow but steady progress in reducing massive nonperforming-loan burdens created by decades of policy lending to ailing state-owned concerns. However, Standard & Poor's Corp. warned last month that a potential slowdown in China's blistering economic growth of 9.1% in 2003 will create new bad debt that will hit the second tier's fast-expanding loan portfolios.
That exploding loan growth reflects efforts to stake out market share ahead of a WTO agreement that mandates full opening of China's bank sector to foreign rivals at the end of 2006.
'Asset-Quality Problems'
"With loans growing over 50% per year, the banks have been warehousing asset-quality problems that are just now surfacing," Moody's senior credit officer Wei Yen said. "The slowdown in economic growth will hurt this group of banks the most [because] their earnings will slow and their asset quality could suffer."
Analysts said the remedy for Minsheng-like scandals and rising bad-debt levels requires second-tier banks to address a fundamental common failure: corporate-governance standards.
Second-tier banks share the same reflex aversion to transparency as their state-owned counterparts, which in combination with inadequate credit-risk and control systems threatens sustainable profits and fraud avoidance.
Improved training to boost the capacity of bank staff and an increase in salaries to market levels are also considered critical to filling skill deficits and reducing incentives for corruption.
中国二线银行风光不再
曾作为中国银行业改革成功的典型而风光一时的那些银行如今境况如何呢？
两年前，中国的二线银行即股份制商业银行尽享四大国有银行所不具备的竞争优势，它们反应敏捷、债务负担轻、市场化程度高，是外国投资者所垂涎的对象。
而如今，这些银行既被腐败丑闻所困扰，与外资的合作也陷于停滞甚至失败。2004年前三个月，它们的坏帐总额共计增长人民币4.7亿元（5,680万美元）。
上周，在深圳发展银行(Shenzhen Development Bank Co.)宣布批准美国私人资本公司新桥资本(Newbridge Capital Ltd.)持有其18%的股份后几小时，中国银行监管部门就发布警告说，该行和中国其他10家二线银行处于集体破产边缘。
4月末，这11家银行的负债总额达到4万亿元，仅仅略低于4.15万亿元的总资产规模。
上市企业深圳发展银行被视为业内的一家明星企业，其强劲而迅速扩张的地方网络对于初涉中国市场的外国机构极具诱惑力。
但是，中国银监会(China Banking Regulatory Commission)副主席唐双宁表示，低下的信贷风险管理水平和无序扩张正使这些二线银行的经营变得越来越不稳定。
这对于那些在中国规模较小银行寻求持股的外国投资者来说十分不利，这些投资者将此作为迅速涉足中国金融业的一个比较安全的手段。
Barclays Capital的研究主管Arthur Lau说，实际上中国目前没有品质“良好”的银行，这使投资者对投资中国银行业的风险有了更真切的认识。
不过，一些分析师称，中国二线银行庞大的市场潜力可能会继续吸引外国投资者的目光，至少在可预见的将来是如此。高盛亚洲（Goldman Sachs (Asia)）的董事总经理胡祖六(Fred Hu)说，所有人都看到了巨大的增长机会，所缺乏的只是卓越管理和风险控制，而这可以由投资者引入。
实际上，中国二线银行一直是主要外国投资的追逐目标，其中花旗集团(Citigroup Inc.)持有上海浦东发展银行(Shanghai Pudong Development Bank)4.6%的股份、恒生银行(Hang Seng Bank Ltd.)持有福建省兴业银行(Industrial Bank)24.98%的股份。恒生银行是英国汇丰控股(HSBC Holdings PLC)在香港的上市子公司。
和国内银行结盟使外国金融机构可以绕过在进军中国市场时遇到的监管限制。这些限制措施包括申请分行执照一年的等待期、禁止全面开展人民币业务等。根据中国加入世界贸易组织(World Trade Organization, WTO)的承诺，这些措施要到2006年年底才会取消。
唐双宁的警告可能会吓跑那些潜在投资者，中国民生银行(China Minsheng Banking Corp.)2月份曝出的欺诈丑闻仍使投资者惊魂未定。该行长期以来一直被视为银行业成功改革的楷模。
虽然民生银行上月末发布了一项独立调查结果，将欺诈称为“偶然的独立事件“，并继续申请在香港上市，但这一事件使人们对中国二线银行的诚信状况陡生疑问。
胡祖六表示，民生银行及其同业对手都面临诚信问题，它们需要非常努力地恢复声誉，赢回投资者的信心。二线银行坏帐水平的增长使其信用危机进一步加剧。
二线银行3月末的平均坏帐比率为7.12%，而同期中国四大国有商业银行的坏帐比率为19.15%。不过官方统计资料显示，国有银行在削减沉重的坏帐负担方面已经取得缓慢而稳定的进展，这些坏帐都是数十年来它们向病入膏肓的国有企业发放指令性贷款造成的遗留产物。然而，标准普尔(Standard & Poor's Corp.)上月警告说，像去年那样高达9.1%的经济增长速度可能无法继续维持下去，这会催生出新的坏帐，从而使二线银行激增的贷款组合蕴含危机。
贷款规模的爆炸式增长反映出，在中国遵守加入WTO的承诺、2006年底向外资全面开放银行业之前，国内各银行都在努力扩大自己的市场占有率。
穆迪(Moody's)的高级信贷评级主任严序纬(Wei Yen)说， 每年逾50%的贷款增长使银行的资产质量问题越积越多，如今还只是刚刚浮出水面。经济增长速度减慢将使二线银行遭受最沉重的打击，因为它们的收益增长将会放缓，而资产质量可能受损。
分析师说，要采取措施避免出现像民生银行这样的丑闻，控制与日俱增的坏帐问题，二线银行需著手解决一个根本的共同缺陷：企业治理标准。
和国有大型银行一样，二线银行对增加信息透明度也不感兴趣，再加上信用风险和控制体系不完善，它们的利润稳定性因此受到威胁，而且也难免出现欺诈现象。
一些人士认为，加强培训以提高银行职员的素质并将其薪资提高到市场水平，这也对弥补职员的技能缺憾、削弱其腐败动机大有裨益。
