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CMBC Launches the Process Bank Reform

2007-9-4

 

President of CMBC. Wang Tongshi suggested that the change from departmental bank to process bank is to be made with the hope to achieve the smooth and seamless collaborations among the departments, however, “the process bank is far from being that simple”. He said, "the process must be continuously reformed and shall undergo ‘painless’ reformation."

Song Fang, Senior Economist researching the process bank in the Development and Research Department of the Bank of Communications commented that to realize the “painless” reformation, “the core will be to develop the corporate culture that is responsibility-centered, while supplemented by the enhanced level of decision-making and management, the improved supporting system, the high-caliber professionals and shall be backed by the strong IT technical capabilities.”

Reforms on the Corporate and the Retail Departments

At the same time, the reforms on CMBC Corporate and Retail Departments have also begun.

Responsible officials from CMBC pointed out that CMBC will establish the Head Office Corporate Financial Marketing Management Committee to advance the system of the industrial financial joint conference. Also the Industrial Financial Business Department will be set up under the direction of the Head Office for the in-depth exploitation of the industrial advantages. For the reforms to be launched at the retailing business sector, CMBC has initially determined the mode for the Head Office, with the special working team to be set up for strengthening the retailing reform, meanwhile pushing the branch bank outlets operation and establishing the system for the sustainable growth in the retail banking business.

The Mid-year Report shows that by June 30, the total asset of CMBC has reached RMB 852.1 billion yuan with an increase by 17.52%; the total deposit is 641.831 billion yuan which has increased by 10.03%; the total loans (including discounts) is 541.885 billion yuan rising by 14.78%.

The Mid-year Report shows a fast growing trend in the deposit-loan ratio. By June 30, the deposit-loan ratio is 72.2% with the average ratio at 70.96% during the reporting period, while at the end of 2006 the ratio was 69.72%.

On this the relevant personnel from CMBC commented that the continual adjustment made on interest rate and reserves by the Central Bank lately has forced the bank to modify its debt structure by introducing the financial products with the deposits so as to reduce the in-debt costs. An intensive growth of the capital market has diverted a part of savings while a comparatively rapid growth in loan business can be also a factor to the increased deposit-loan ratio.

Although CMBC has a deposit-loan ratio slightly lower than the 75% limit of the regulatory standard, the two interest rates addition made by the Central Bank respectively in July and August have narrowed the profit margins of the bank and have made the savings attraction more difficult. So if CMBC wishes to lower the deposit-loan ratio while without affecting the profit derived from deposit-loan interest difference, it must try to increase the amount of current savings and timed deposits with at least below one year.

 

 

 

 

 

 

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