China Finance

China Finance

• Presentation Outline
• Banking and non-banking Financial Institutions
• Trade Finance
• Project Finance
• Securities markets

Banking Structure

• People’s Bank of China Central bank of China--similar to US’s Federal Reserve System
• Specialized banks: (1) Bank of China, (2) Industrial and Commercial Bank of China, (3) Agricultural bank, (4) China’s Construction bank
• Commercial bank
• Foreign banks

People’s Bank of China (PBOC)

• Duties:
• Implement/administer laws relating to banks
• Regulate currency
• Formulate interest rate policy
• Control credit -loans
• Manage FX reserves
• Monitoring of banking sectors (M&A etc)

Bank of China (specialized bank)

• Responsibilities:
• All foreign trade and remittance transaction
• International inter-bank transactions
• FX and gold
• International loan syndication
• Government bond and securities issues
• Foreign investments
• Consultancy services to investment on-shore and off-shore

Industrial and Commercial Bank of China (ICBC)

• Created in 1983
• Accept deposits and loans to individuals and companies
• provide payroll management services for state enterprises
• Operate securities, trust and real estate business
• Issue credit cards
• Deal with FX matters in SEZs

Agricultural Bank of China

• Created in 1979
• 2 largest specialized bank
• Serve rural area for functions similar to ICBC’s functions in urban area

China’ s Construction Bank (CCB)

• Created in 1954
• supervise and settle large scale finance of project
• regulate investment funds of state enterprises
• One of the 4 state-owned commercial bank that that control about 80 per cent of the banking business in China
• First state-owned bank to remunerate plan for performance-related bonuses (9/28/99)
• CCB president earns about $361 (monthly) under the current system
• allow the most senior bank executives to have salary six times that of the junior banker