The People’s Bank of China is the country’s most prominent bank. It is one of the departments of the State Council, and functions as the central bank of China. It carries out monetary policies under the laws and legislation of China, independent of any interference from local governments, social groups and individuals. It does not engage in personal banking activities. Its main business includes:
- Formulating and implementing monetary policies;
- Uniquely issuing RMB and ensuring its circulation;
- Supervising and managing the inter-bank lending market and inter-bank bond market;
- Managing China’s foreign exchange market and gold market;
- Holding, managing and operating China’s foreign exchange reserves and gold reserves;
- Managing the National Treasury;
- Maintaining the normal operation of payment and settlement systems;
- Surveying, analyzing statistics and forecasting the future trends of the financial industry;
- Engaging in China’s international financial activities as the central bank.
Five largest commercial banks in China
The Industrial and Commercial Bank of China, founded in 1984, has become the biggest commercial bank in China, and one of the world’s top five hundred enterprises. By the end of 2010, it had the highest market capitalization of the world’s listed banks. It has over 22,000 branches all over China, and also has expanded internationally. By October 2011, it had over 200 overseas agencies and established correspondent relationships with 1453 banks in 132 countries. Compared to the other four banks, its advantage lies in its relatively mature electronic banking services, multi-faceted business structure, its strong ability to innovate, its ability to flexibly adjust its investment structure according to the macro-control policies, and its application of the newest technology in developing its online business.
The second largest state-owned commercial bank in China is China Construction Bank. Unlike ICBC, the CCB puts a lot of weight in capital construction investment. Founded in 1954, it has made great contribution to improving improve investment benefits and triggering China’s economy growth. The CCB changed from a specialized bank to a commercial bank in 1994. In this process, it established a new modern business management system. By the end of 2011, it had about 3,290,000 employees, and 13,581 branches. It ranked No.5 in 2010 China’s 25 Most Respected Companies All-star List due to its effective solution for dealing with the bad-debt problem, ability to find early solutions to potential problems, and its efficacious employee motivation.
The third largest bank is the Bank of China. Having just celebrated its 100th birthday in 2012, it is one of the oldest banks in China and its foundation was approved by Sun Yat-Sen. The first overseas branch of China’s financial industry was founded by BOC in London in 1929. What makes it special and different from the other four state-owned commercial banks is that it was declared a professional foreign exchange bank by the Chinese government as early as 1950. It owns several financial institutions, such as BOC Hong Kong, BOC International, and BOC Insurance, and provides high quality financial service to personal and corporate clients all over the world. Now, having over 10,000 domestic branches and over 600 branches abroad, it is undoubtedly the most internationalized commercial bank in China. It was selected as ‘Best Bank of china’ by Euromoney and has been one of the world’s top five hundred enterprises for 18 consecutive years.
Agricultural Bank of China was the first state-owned commercial bank established after the foundation of the People’s Republic of China. As shown by its name, its strength lies in financial affairs concerning agricultural development and improvement. It has the most clients and most branches and agencies out of these five big commercial banks. So far, it has partnered with many large international players such as Standard Chartered Bank, Hang Seng Bank Limited, Citibank, Crédit Agricole, and Bank of Montreal. It had an annual turnover of 377.7 billion, and an asset scale of more than 11.68 trillion by the end of 2011. Like the other banks, it has won many awards and honors both nationally and globally.
The last and the oldest state-owned commercial bank is the Bank of Communications. Reformed in April 1st, 1987, it became China’s first state-owned joint-equity commercial bank, with business stretching into every part of the country. Unlike the other four banks which are headquartered in Beijing, its headquarters lies in Shanghai, the financial center of China. It has developed at a very fast pace, and is important in today’s financial system. One apparent example is that it is the global partner of Shanghai World EXPO. It is also the first mainland commercial bank listed overseas. It revolves its business around several key principles: a clear development strategy, complete operating regulations, and high-quality financial service. According to reports of the first quarter of 2012, its total asset amount to over 4.88 trillion yuan. In 2009, BOCM ranked within the world’s top 50 banks. If this trend continues, it is reasonable to expect a bright future for the bank.
Policy commercial banks
There are also policy commercial banks in China such as the Agricultural Development Bank of China, the Export-Import Bank of China, and China Development Bank. Making a profit is not the main goal for these banks. Instead, their main task is to work as the government’s financial agency to regulate the macro economy, and promote the economic development.
There are 12 shareholding commercial banks in China, including China Bohai Bank Co., Ltd., China Zheshang Bank Co.,Ltd., Evergrowing Bank Co., Ltd.,China Citic Bank, China Everbright Bank Co., Ltd., Hua Xia Bank Co., Ltd., Shenzhen Development Bank Limited Company, China Merchants Bank, Shanghai Pudong Development Bank, Industrial Bank Co., Ltd., China Guangfa Bank, and China Minsheng Banking Co.ltd.
The Postal Savings Bank of China is unique from the other policy commercial banks. It has the natural advantage of the postal system, so it has the most branches in urban and rural areas of China. On December 31st, 2011, its transformation into a limited liability company was approved.
In recent years, city commercial banks have developed at a very fast pace. Now, according to the website of China Banking Regulation Commission, there are a total of 120 city commercial banks and this number is expected to grow. These banks are usually relatively small, and they have to adopt special preferential policies to attract clients.
Also there are several banking organizations unique to China, such as rural cooperative banks and rural credit cooperatives. These organizations are founded to benefit China’s 900 million farmers.
Picture Source: People’s Bank of China