Retail+Banking+in+China+Homework

= ** Retail Banking in China Homework ** =  The retail banking market is dominated by China’s state lenders, namely Agricultural Bank of China (ABC), BOC, CCB and ICBC. These four institutions control more than half of the country’s total banking assets, according to official figures for the first three quarters of 2006 Between them, ICBC, BOC and CCB held RMB 7.78 trillion in personal deposits as of 30 June 2006.  The state-run banks operate from a highly advantageous position. They have more than 75,000 branches throughout the country and enjoy close links to China’s largest companies, including state-owned and formerly state-owned enterprises. China’s accession to the World Trade Organization (WTO) has provided the impetus for bank reform. BOC, CCB and ICBC have received a combined USD 60 billion in new capital as well as other purchases of non-performing loans, to help clear up their balance sheets. Non-performing loans have fallen from more than 20 percent to less than 5 percent of their total portfolio. These three have all turned to foreign investors and the capital markets as a means to build expertise, improve risk management systems and recapitalize.  CCB, which is 9.1 percent-owned by Bank of America and 5.1 percent-owned by Temasek, raised USD 9.2 billion in an October 2005 Hong Kong listing. BOC, which is working with a number of foreign partners and minority shareholders including Royal Bank of Scotland, completed a USD 11.2 billion Hong Kong IPO in June 2006.   ICBC raised USD 21.9 billion in a simultaneous debut in Hong Kong and Shanghai in October, making it the world’s largest ever IPO. It has also attracted foreign expertise — and USD 3.8 billion — from Wall Street firm Goldman Sachs, Germany’s Allianz and credit card giant American Express. These partners,  and particularly Goldman Sachs, have been helping the bank to revamp its risk management and internal controls.  ABC may go through a similar process. It reported more than USD 90 billion in non-performing loans at the end of 2005, but Beijing has taken steps to improve operations and make the bank more competitive. There are more than 70 overseas banks operating in China. Some have entered through direct investments in domestic lenders, others by building their own franchises. Many of the largest international banks have chosen to invest directly in domestic banks as well as grow their own business organically. Among the companies taking this route are Citigroup and HSBC; both have identified China as one of their priority markets for retail banking.  State-owned commercial banks 22.54 51.3%  Joint stock commercial banks 7.14 16.2%  City commercial banks 2.59 5.9% Other banking institutions 11.67 26.6%

 Sources:  http//:www.kpmg.com.hk      http//:www.kpmg.com.cn