Can Bank of Communications succeed in setting up banks in rural China?
Bank of Communications, part-owned by HSBC Holdings, is in talks to buy stakes in some rural banks in China's Jiangsu Province, President Li Jun said. The talks are “under way and proceeding smoothly,'' Li said in an interview in Beijing on Nov. 3. He declined to say how many rural commercial banks are being targeted or how large the stakes may be.
BoCom, as the smallest of China's five major state-owned banks is known, may try to tap profits from serving China's 800 million farmers. Chinese President Hu Jintao has made boosting rural incomes a priority, promoting loans to farmers and raising public works spending. BoCom Chairman Jiang Chaoliang said on Oct. 18 the bank is considering setting up branches in rural areas. “Rural areas are less developed, hence they have potential,'' he said.
Jiangsu Province in eastern China is the nation's second largest in foreign trade and fifth biggest by population. Its capital is Nanjing and it borders Shanghai, China's richest city. China relaxed banking rules in less-developed provinces in December to encourage investors to set up locally based banks, loan companies and credit co-operatives. The regulator expanded the pilot program to 31 provinces from six to boost competition.
HSBC, the largest foreign bank in China, received approval in August to set up a rural bank in the city of Suizhou in central China's Hubei province. Citigroup, the biggest U.S. bank, plans to set up at least 10 rural banks and loan companies in the countryside, China's director of cooperative finance said.
Bad loans at China's rural commercial banks, restructured from credit co-operatives, fell to 4.2 percent of total lending at the end of September, down 1.7 percentage points from the end of last year.
BoCom, which has 1,600 branches nationwide, said that third-quarter profit almost doubled as economic growth in China bolstered loan demand and fee income surged on the nation's stock market rally.
With Banks of Communications moving into rural China, will other International banks follow in their footsteps?
Jiangsu Province in eastern China is the nation's second largest in foreign trade and fifth biggest by population. Its capital is Nanjing and it borders Shanghai, China's richest city. China relaxed banking rules in less-developed provinces in December to encourage investors to set up locally based banks, loan companies and credit co-operatives. The regulator expanded the pilot program to 31 provinces from six to boost competition.
HSBC, the largest foreign bank in China, received approval in August to set up a rural bank in the city of Suizhou in central China's Hubei province. Citigroup, the biggest U.S. bank, plans to set up at least 10 rural banks and loan companies in the countryside, China's director of cooperative finance said.
Bad loans at China's rural commercial banks, restructured from credit co-operatives, fell to 4.2 percent of total lending at the end of September, down 1.7 percentage points from the end of last year.
BoCom, which has 1,600 branches nationwide, said that third-quarter profit almost doubled as economic growth in China bolstered loan demand and fee income surged on the nation's stock market rally.
With Banks of Communications moving into rural China, will other International banks follow in their footsteps?
posted by Charltonmedia.com @ 2:11 PM
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