Shanghai Lobbies for Financial Center, Liberalized
Shanghai still has dreams of building a financial center to rival those in New York, London, and Hong Kong, even in the teeth of the present economic typhoon, and has submitted a detailed scheme to Beijing that is winding its way with some success through the State Council's approval process.
China Life to Manage "Toxic Milk Powder" Medical Fund
After paying lump sum compensation to the families of nearly 300,000 babies confirmed to be melamine victims, 22 companies implicated in the milk powder contamination will jointly form a medical compensation fund with 200 million yuan. China Life Insurance (Group) Company (China Life) has been commissioned to manage and operate the fund.
Banks' Lending Reluctance Undermines Stimulus Plan
With the help of foreign shareholders, Chinese commercial banks reinforced risk management after going public. During the present downturn with its already growing risk of NPLs, the government is asking banks to increase loans to prop up firms in difficulty, but meanwhile their boards require management to avoid risk, creating a dilemma.
CBRC Nods to Commercial Banks' M&A Lending
A moribund stock market and slowing economic growth have littered the Chinese landscape with distressed assets and troubled companies, offering M&A opportunities by the dozen for consolidation, industrial upgrading and economic restructuring. The China Banking Regulatory Commission (CBRC) has released "Commercial Bank M&A Loan Risk Management Guidelines" (we'll just call them Guidelines), and the floodgate of acquisition loans for the banking industry has finally been opened
China to Launch a Deposit Insurance System in 2009
China is set to introduce a bank deposit insurance system next year. The People's Bank of China (PBoC) has now cut the interest rate for savings deposits from 0.72% to 0.36%. Analysts predict it may even be cut to zero after the deposit insurance system is launched.
BoA Again Raises Its Stake in China Construction Bank, Amid Selling Concerns
A new investment from Bank of America (BoA) totaling 48 billion yuan (about US$7 billion) will increase its share holding in China Construction Bank (CCB) to 19%. With this investment, BoA's book gain in CCB will rise to US$11.7 billion. But the share holding increase has triggered analysts' concern that BoA may sell CCB shares to relieve its domestic financial pressure
Banks' Fast Loans to Economic Stimulus Cause Concern of Bad Debts
The introduction of the central government's 4 trillion yuan program to stimulate the nation's economy has gotten China's state-owned commercial banks to announce their credit plans for the rest of the year, in line with the special political mission of China's banking sector. But although there will be no lack of good credit opportunities, the emphasis on speed by central authorities will increase the possibility of big bad debts.
Banks See Profit Erosion from Beijing's Housing Market Rescue
Profits of China's commercial banks may fall victim a bit to the government's real estate market support policies, and the banks are showing reluctance to introduce their own rules related to housing lending in the future. Meanwhile, warnings on credit risk from bank supervisors show that they do not want to see a speculative bubble in the real estate market triggered by a relaxation of lending policies.
Bank of China Burnt by US Subprime Investments
It appears that the Bank of China (BOC) may be suffering the largest losses among Chinese banks in the subprime crisis. According to its just released third-quarter report, during the first three quarters this year its losses in foreign currency securities investment totaled 16.785 billion yuan. By September 30, BOC's holdings of foreign currency securities that have been revealed amounted to $18.96 billion, for which BOC's depreciation reserve was $3.611 billion.
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