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