Wednesday, February 02, 2005

a brief translation of a report investigating the city banks in China


Feb 2, from Sina

Central government has released the investigation report on 20 city commercial banks at the end of January.

<>The total assets for the banks in the middle of China grow up 1.58 times, the ones in west provinces 2.15 times and in east provinces 2.75 times. <>

But the branches and employees remained at the same level or even fell down.

The large bad loan is the biggest problem for those banks. The percentage of the bad loan for those banks is about 14 %. But the money they have handed in for the bad loan is only about 6 billion yuan, almost 60 million less than the moeny they should keep.

While the loan syndicate percentage in most banks has already exceeded the international warning line, the banks are lack of the valid regulation of the risk management. Many of the regulation are null, or set up only to be checked by Beijing officials.

<>Most of the city banks are controlled by the provincial governments or state-owned companies. They often use their right to order more loans from the banks without respect to the risk of the banks. More dangerously, they put attention on the short-term profit instead of the long-term development. The dividend rate in some of the banks is as high as 90 per cent.

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