| The Chinese Government started reforming the | | | | state owned banks, the number of branches |
| banking sector significantly in 2005 by | | | | have decreased rather than increased. |
| letting Shanghai based Bank of Communications | | | | |
| ("BCom") list on the Hong Kong Stock | | | | - An increasing emphasis to developing fee |
| Exchange. | | | | income as opposed to lending more loans such |
| | | | as wealth management products. To date, ICBC |
| BCom was a pathfinder in the reform as HSBC, | | | | has the largest number of such wealth |
| one of the UK's largest financial groups was | | | | management centres of the 4 state owned |
| allowed to become its biggest foreign | | | | banks. |
| shareholder holding no more 20% of its | | | | |
| shares, the largest percentage allowed under | | | | - An increasing emphasis being placed on |
| Chinese law for foreign interests. | | | | consumer finance such as developing consumer |
| | | | loans and credit cards to encourage domestic |
| All subsequent initial public offers ("IPO") | | | | spending. China Merchants Bank and China |
| in Hong Kong by Chinese state commercial | | | | Construction Bank are the two banks with the |
| banks followed the model of the Chinese | | | | most number of credit and debit cards issued. |
| government allowing major foreign bank groups | | | | |
| to hold a minority stake in the banks. | | | | - Increased competition at the retail level |
| | | | as a number of foreign banking groups have |
| BCom's IPO was followed later in the same | | | | expressed intention to incorporate locally in |
| year by China Construction Bank, one of the | | | | China to enter this business. To date, |
| big 4 state owned banks. 2006 was a watershed | | | | Citibank, Standard Chartered Bank, Hang Seng |
| year for the major state owned banks. | | | | Bank, JP Morgan Chase has already been |
| | | | approved to incorporate locally. |
| Both the biggest (Industrial and Commercial | | | | |
| Bank) and second largest (Bank of China) | | | | - Innovation new products been introduced by |
| Chinese state owned banks successfully listed | | | | the state owned banks to lessen reliance on |
| on both Hong Kong and Shanghai Stock | | | | making just plain loans such as treasury and |
| exchanges. Industrial and Commercial Bank's | | | | trade financing products. |
| listing had the distinction of being the | | | | |
| largest global IPO in 2006. | | | | - The banking sector facing competition from |
| | | | insurance giants such as China Life and Ping |
| The Agricultural Bank is the only remaining | | | | An both setting up bank subsidiaries. |
| Chinese state owned commercial bank that | | | | |
| remains to be restructured for IPO. | | | | - State owned banks venturing overseas as |
| | | | China becomes a economic powerhouse and |
| With the subsequent successful listing and | | | | follows locally grown Chinese MNCs going |
| the Chinese banks being well capitalised as a | | | | overseas. |
| result, the following scenerios are being | | | | |
| envisaged for the Chinese banking sector | | | | - Improved risk management processes of the |
| | | | banks as the Chinese government have stressed |
| - Intense competition across the sector as | | | | that the state owned banks must be operated |
| foreign banking groups are now allowed to | | | | on a commercial basis. |
| conduct business in China as geographic and | | | | |
| customer restrictions on RMB services were | | | | - Improved corporate governance of the state |
| removed in December 2006. | | | | owned banks due to global pressures to |
| | | | improve shareholder returns. |
| - Consolidation of branches by the listed | | | | |