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Top banker: State banks to go public soon
(Xinhua)
Updated: 2005-03-07 15:25 Governor Zhou Xiaochuan of the People's Bank of
China, or the country's central bank, revealed Monday that the planned
share-offerings and listings of state-owned Bank of China (BOC) and China
Construction Bank (CCB) are "not too far away".
The banks' stock market debuts should be decided by their boardof directors
and depend on whether there are "windows of opportunity" on the capital market,
he told a press conference during the annual session of the National People's
Congress (NPC).
Zhou Xiaochuan,
governor of the People's Bank of China.
[Xinhua] |
The banks were also consulting overseas and domestic investmentbanks, their
financial advisers and accounting firms regarding thetiming, Zhou added.
Both the BOC and CCB have completed financial reshuffle and need to
strengthen corporate governance and push on some internal reforms, he said.
The BOC and CCB, considered as financially healthier banks among China's Big
Four that also include the Industrial and Commercial Bank of China (ICBC) and
Agricultural Bank of China (ABC), are leading the government's latest,
aggressive reform in the vital financial system.
They received a combined 45 billion US dollars in foreign exchange reserves
at the end of 2003 from the central government aiming to bolster their balance
sheets.
The bailout package has helped the BOC and CCB raise their capital adequacy
ratios (CARs), being a measure of their available capital in proportion to their
outstanding loans, to 8.62 and 11.95 percent, respectively, by the end of 2004.
The BOC's and CCB's non-performing loan (NPL) ratios plunged to5.12 and 3.7
percent, respectively, by the end of last year, according to a report delivered
at the press conference.
The banks have both become joint-stock firms with a governance structure
featured by a shareholders' meeting, board of directors,board of supervisors and
senior management, which have all startedoperation.
The BOC has done away with all government ranks of its staff, urging its
230,000-strong employees to vie for new jobs in the bank.
A new company, the Central Huijin Investment Co., was inaugurated as major
shareholders of the two banks to supervise their restructuring. It is managed by
former department heads of the People's Bank of China with a board comprising
representativesfrom the State Administration of Foreign Exchange, Ministry of
Finance and the central bank.
On Monday, Zhou Xiaochuan also revealed reform of the other twobig state
banks -- the ICBC and ABC -- "will also advance in a similar direction".
"We should say that joint-stock reform of the ICBC and ABC willbe carried
forward on the back of progress and experience achievedon the BOC and CCB."
He gave no details about whether the state would also inject hefty funds into
the ICBC and ABC. "Different banks will be given different policies," he said.
"Hot money" not much in China
Zhou said that there might be some speculative funds betting on the yuan
appreciation, or the so-called "hot money" flowing into China, but the amount
was "not big.
The reason is that China now still implements foreign exchange controls to
some extent, he told the press conference.
China's forex reserve, which rocketed to 609.9 billion US dollars -- second
only to Japan -- at the end of 2004, consist largely of trade surpluses,
non-trade surpluses and capital investment from overseas, said Zhou, governor of
the People's Bankof China.
As a matter of fact, the reserve started to surge not in 2004, but as early
as 2002, on the backdrop of China's economic start-up following the Asian
financial crisis, he said.
Forex reserve should be denominated in a number of currencies (instead of the
US dollar alone) and comprise diversified products in a bid to award off risks,
Zhou said in reply to a German reporter's question on whether China would hold
more euro-denominated assets.
"We have long attached importance to the holding of a
certain amount of euro assets," the central banker said.
China
not to loosen macro economic control
Ma Kai, minister in
charge of the State Development and Reform Commission, said at the press
conference that the country's efforts to cool down the economy should "not be loosened up at all" as current achievements
from macro-control are just "preliminary".
The unhealthy and destabilizing factors in the economy have been curbed --
but "not on a consolidated basis," he said.
"New problems are popping up as we are addressing the old ones," he said,
pointing to investment in fixed assets last year, an indication of how much the
government was spending on major infrastructure projects.
"Typically, the resurgence of investment boom is still possible.There were
150,000 new projects last year. In December alone, there were 20,000," he
said.
China targets an 8-percent economic growth rate in 2005, lower than
the robust 9.5 percent registered last year.
Ma said, "Government intervention and the basic role of market in allocating
resources should reinforce each other."
Economic growth patterns should be optimized, the minister added, citing that
the country's gross domestic product (GDP) is now just one-eighth of that of the
United States, but consumes half of the power electricity that the US does.
The newly installed capacity reached 50.55 million kilowatts last year, an
annual record in the world. "The increase of electricity production capacity,
however, still cannot catch up with the pace of demand growth," he said.
China began 2004 amid serious worries that the economy was dangerously
overheated.
Inflation rose at an alarming rate, hitting a peak of 5.3 percent last July
and August. Fixed asset investment hit ten-year highs in the January-March
period, growing by 43 percent.
This prompted the central government to order energy-saving measures and tell
local officials to cut spending on pointless prestige projects and unneeded
factories, roads and other facilities.
A raft of market-based macro-control measures including the first bank
interest rate hike in nearly a decade were taken beforered-hot investment growth
was effectively curbed and the consumer price index, a key barometer of
inflation, slowed sharply to 1.9 percent last January from an average 3.9
percent in 2004.
"We have avoided a roller-coaster in the economy," Ma said.
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