By Klaus Koehler

Agreements and Reforms after Joining the WTO

When China joined the WTO, the organization demanded China to comply with special obligations concerning the bank business in the country. China had to agree to open their bank sector completely to foreign banks within five years after joining the WTO from 2001 - 2006. China specifically agreed, that it would allow foreign banks to accomplish foreign currency business without any market access or national treatment limitations, and to conduct foreign currency business with foreign-invested companies and foreign individuals, subject to certain geographic restrictions. Two years after joining the WTO, foreign banks should have been able to conduct domestic currency business with Chinese companies subject to special geographic limitations, and within five years China agreed to lift all geographic restrictions. China also agreed that foreign banks are allowed to provide financial leasing services at the same time as their Chinese counterparts.

However, China was slow in implementing the agreements. In 2002 the People’s Bank of China issued regulations governing foreign-funded banks along with rules to keep pace with the WTO commitments but the PBOC was extremely cautious in opening their bank sector. This situation made it difficult for foreign banks to enter the market and expand their presence. To give an example, the PBOC allowed foreign-funded banks only to open one branch every 12 months. Of course this resulted in pressure from countries such as the USA, Australia, Canada Japan and several European countries. Therefore the PBOC announced in December 2003 that foreign banks were permitted to conduct domestic currency business with Chinese companies and the working capital requirements for foreign banks were reduced. Read the rest of “China’s Banking Industry Part II” or post a comment

By Klaus Koehler

When the China Industrial and Commercial Bank (ICBC) opened for public trading at the stock exchange end of October, the bank raised a total of USD 19.1 billion to start with, achieving the largest initial public offering ever. ICBC is now the top listed bank in Asia and the fifth biggest in the world.

Despite the enthusiasm created by ICBC’s listing, and the fact that international advisors such as Morgan Stanley are planning to add ICBC to its standard index soon, some analysts are still concerned about the basics and fundamentals of China’s banking industry. Over a long period, loans were approved by politically motivated reasons rather than economic decisions, and on several occasions, banks previously had to be “bailed out” by the government.

History of the Banking Industry in China

In the earlier years of the People’s Republic nationalization, the consolidation of the country’s banks received the highest priority. Therefore the banking industry was the first sector to be socialized. In order to maintain a firm control over all financial services, including credit and money supply, the banking system was centralized under the Ministry of Finance.
Read the rest of “China’s Banking Industry” or post a comment

Talent&Pro is a young and flexible Operational Consultancy agency that focuses on banks and insurance companies. It is an agency that, apart from providing high-quality services towards clients, is strong regarding the personal development and career opportunities of its own employees as well. Those employed at Talent&Pro are offered a two-year contract, with a one-off extension to five years, during which they receive all the space to prepare and shape their plans for the future. Basically just like Marco Hoekstra did it. With many years’ experience in banking and finance, he started out at Talent&Pro as operational manager in the Netherlands 7 years ago. Currently, with over 400 employees, Marco is focusing his attention on Talent&Pro China.

A born developer, Marco has great interest in fast economic development. After the Netherlands, Germany and the UK were conquered, it was the right moment to realize a new Talent&Pro branch in the Far East. “A place where the market is developing at top speed, where the hectic pace of the improving economy requires new strategies all the time, and where young, highly qualified individuals have a passion for internationalization…” Shanghai, China. Read the rest of “Plenty of Space in Shanghai” or post a comment