2016/10/3 Banking System Reform since 1978 Banking System Reform since 1978 State-Owned Specialized Banks(1978-1994 State-Owned Commercial Banks(1994-2002) Rural credit cooperatives and Urban credit cooperatives 1992: CSRC established 80s as supplementa 1994: three policy banks formed anking to support economic growth. Rural credit cooperatives are small, collectively-owned avings and ns that handled deposits 1995: the PBoC's central bank status legally confirmed ind short-term loans for individual farm families, villages 1996: Peoples Construction Bank renamed as china Urban credit cooperatives provide small-scale financial 1998: CIRC established 8: special policy arrangements started up in urban areas. 1999: AMC established 2001: China entered wto Banking System Reform since 1978 Reform of socbs State-Holding Joint Stock Commercial Banks Special Policy Arrangements(1997-2003) In 2002, the State Council confirmed the major task of Abolishment of credit plan commercial banks to state-holding joint-stock banks First round of capital injection oC and CCB were chosen as two pilot banks, financed Establishment of AMC and Disposal of NPL Market-Oriented Banking System(2003) BoCom listed in HKSE in 2005. became state-owned in Second round capital injection After financial reconstruction and introduction of strategic Introducing of foreign strategic investors investors, all big 5 a listed in HKSE and sse -iPo in HKSe and sse Special Policy Arrangements (19982002) Capital Injection(1998) Abolishment of credit plan(1998) OCBs could allocate funds and select projects at their own 中国工商纵行 Treasury bond lss PBoC controls and intervenes the amount of credit through moral suasion( window guidance) 中国右 Capital injection( 1998) MOF Four AMcs were established to take npls off from socbs All AMCs are financed by mof ①中国农业银行 112016/10/3 11 2-61 Banking System Reform since 1978 • State-Owned Specialized Banks(1978-1994) – Rural credit cooperatives and Urban credit cooperatives began to emerge in the mid 1980s as supplementary banking to support economic growth. – Rural credit cooperatives are small, collectively-owned savings and lending organizations that handled deposits and short-term loans for individual farm families, villages, and cooperative organizations. – Urban credit cooperatives provide small-scale financial services to individual and collective enterprises that sprang up in urban areas. 2-62 Banking System Reform since 1978 • State-Owned Commercial Banks(1994-2002) – 1992: CSRC established – 1994: three policy banks formed (Plural-banking system started) – 1995: the PBoC's central bank status legally confirmed – 1996: People’s Construction Bank renamed as China Construction Bank – 1998: CIRC established – 1998: special policy arrangements started – 1999: AMC established – 2001: China entered WTO 2-63 Banking System Reform since 1978 • State-Holding Joint Stock Commercial Banks – In 2002, the State Council confirmed the major task of banking system reform is to transform state-owned commercial banks to state-holding joint-stock banks – BOC and CCB were chosen as two pilot banks, financed with $45 billion in the end of 2003 – BoCom listed in HKSE in 2005, became state-owned in 2008 with transfer of equity to MOF – After financial reconstruction and introduction of strategic investors, all big 5 are now listed in HKSE and SSE 2-64 Reform of SOCBs • Special Policy Arrangements (1997-2003) – Abolishment of credit plan – First round of capital injection – Establishment of AMC and Disposal of NPL • Market-Oriented Banking System(2003) – Second round capital injection – Introducing of foreign strategic investors – IPO in HKSE and SSE 2-65 Special Policy Arrangements (1998-2002) • Abolishment of credit plan (1998) – SOCBs could allocate funds and select projects at their own discretion – PBoC controls and intervenes the amount of credit through moral suasion (window guidance) • Capital injection (1998) • Asset Management Companies (1999) – Four AMCs were established to take NPLs off from SOCBs’ books – All AMCs are financed by MOF Capital Injection (1998) MOF RMB 27B liquidity Treasury bond issuing Lowering RRR from 13% to 6% Capital injection 2-66