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Australians buying into Jinan city bank
By Zhang Dingmin (China Daily)
Updated: 2004-11-19 10:01
The Jinan City Commercial Bank (JNCCB), a regional lender in East China's
Shandong Province, has won regulatory approval to sell a 11 per cent stake to
the Commonwealth Bank of Australia (CBA).
JNCCB said yesterday the China Banking Regulatory Commission (CBRC) approved
its strategic co-operation plan with the CBA earlier this month, which will also
give the Australian lender an option to purchase up to a total of 20 per cent of
its shares by May 14, 2008.
CBA will have one seat on the board of the Chinese bank, which has 1 billion
yuan (US$120 million) in shareholders' equity.
JNCCB and the Xi'an City Commercial Bank, based in Northwest China's Shaanxi
Province, are among the few city commercial banks that have reported progress in
ushering in foreign investors.
The CBRC is promoting restructuring of the nation's 112 city commercial
banks, trying to resolve their financial risks and enhancing their role in
supporting local economies and the millions of small and medium-sized
enterprises.
The CBRC said earlier this year it would encourage private Chinese investors
and foreign investors to buy into the nation's joint-stock commercial banks,
including city commercial banks, to help them grow stronger. On Tuesday, the
commission said it had promulgated its first guidelines on the regulation and
development of city commercial banks in an effort to accelerate the reform and
development of the regional lenders.
JNCCB ranks the eighth in terms of shareholder equity among China's 112 city
commercial banks, which are joint-stock banks operating on a regional basis.
Its total assets have expanded by more than five times since its
establishment in 1996, while share capital rose to 1 billion yuan (US$120
million) from 250 million yuan (US$30 million).
JNCCB has about 23 billion yuan (US$2.8 billion) in total assets, while the
CBA has total assets of 305 billion Australian dollars (US$213 billion) and
shareholders' equity of 24.9 billion Australian dollars (US$17.4 billion).
The co-operation with CBA will help JNCCB improve its risk resistance
capacity, accelerate its integration with international best practices and lift
its management levels, a JNCCB spokesperson said yesterday.
CBA's purchase of the 11 per cent stake will raise JNCCB's capital adequacy
ratio by 1 percentage point to a healthy 10.26 per cent.
Though relatively healthier than the State-owned banks, China's city
commercial banks are also hampered by high bad loan ratios and low capital
adequacy, largely due to their blind business expansion in earlier years and
administrative interference by the government.
The 112 banks had an average capital adequacy ratio of 6.13 per cent at the
end of last year, below the 8 per cent minimum requirement.
Under the agreement, CBA will also transfer seven banking techniques to JNCCB
in key areas such as information technology, credit card, risk management and
marketing, the Chinese bank said.
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