An official with the State Council predicted here Saturday that
China's banking sector will inevitably go into mixed operations in
the future.
Addressing a meeting on the reform of China's banking sector
during the annual conference of Boao Asian Forum, Li Jiange, deputy
director of the Development Research Center under the State
Council, said that mixed operation is the only option if the
country wishes to sharpen the competitiveness of its banks in the
context of financial and economic globalization.
China currently bans its banks, securities houses and insurers
from venturing into the businesses of each other. Such restrictions
will be lifted in a mixed operation system.
China borrowed its single operation system from the West. But
the United States had already abandoned that system in 1999.
To prepare the banking sector for the inevitable change, China
has started trial practice with mixed operation.
Leading banks in the country, including the Industrial and
Commercial Bank of China, the China Construction Bank and the Bank
of Communications, have set up their own fund management
companies.
According to Li, mixed operation currently takes two forms in
China in terms of business cooperation among banks, securities
houses and insurers, and the founding of quite a few finance
holding companies.
Statistics show that 34 percent of China's insurance premiums
now comes from banks acting as agents for insurance companies.
Sharing Li's prediction, Gary Coull, chairman of CLSA Limited,
said the profit of Chinese banks now mainly comes from the margin,
but mixed operation will allow them to offer new services and
disperse their risks.
(Xinhua News Agency April 23, 2006)