Opportunities and challenges faced by the banking industry.

Opportunities and challenges faced by the current banking industry

With China's accession to the WTO, China's financial market has been fully opened, including the banking sector, allowing foreign banks to set up branches in various parts of China and enjoy the same treatment as domestic banks. At the same time, according to the principle of reciprocity, China can go abroad and develop overseas while introducing foreign financial institutions. Therefore, China's entry into WTO has brought shock and competitive pressure to China's banking industry, and provided a good opportunity for China's banking industry to accelerate its development and participate in international competition.

First, the status quo of China's banking industry

Judging from the current situation, China's banking system consists of four parts: ① state-owned commercial banks; ② Other commercial banks; ③ City commercial banks; ④ Central Bank. Among them, other commercial banks refer to joint-stock commercial banks; City commercial banks refer to banks established by former city credit cooperatives according to the plan approved by the State Council to provide financial services for city enterprises and individuals. Among the above four types of banks, other commercial banks have no or little historical burden; The assets of city commercial banks account for a small proportion of all bank assets, so we will not discuss them for the time being; However, no matter in the existing state or in the fully open situation, the central bank is only faced with changes in the content and form of supervision. Therefore, the key to analyze China's banking industry is to analyze the wholly state-owned commercial banks, because the four wholly state-owned commercial banks of industry, agriculture, China and construction account for the vast majority of the total savings, deposits and credit assets of the whole society.

Compared with the banking industry in developed countries in the world, the gap in China's banking industry is mainly manifested in the following aspects:

1, poor profitability. The per capita profit of China's banking industry is only $65,438+$3,000, which is far below the advanced level in the world. The United States is 4 1 times that of China, Germany is 45 times that of China and Britain is 40 times that of China. However, due to the impact of the Asian financial crisis, the profitability of Japanese banks has fallen sharply, and they are in a state of serious losses, which is not comparable.

2. Insufficient capital and low ability to resist risks. Although the total capital and total assets of the four major commercial banks are considerable, the per capita capital is only $22,800, which is less than 12% in the United States, 15% in Britain, 0.9% in Germany and 0.9% in Japan.

2.2%。 At the end of 1997, the ratio of owners' equity to loans was only 4.2%, which was less than 6.9% after issuing special treasury bonds to replenish capital.

3. Poor asset quality. The NPL ratio of the four major commercial banks is 25%, which is only a conservative estimate. However, this indicator of foreign banks is generally lower than 8%. Therefore, although the total assets of the four major commercial banks continue to grow, the profit level is gradually decreasing due to a large number of non-performing assets.

4. The system is seriously ill, the staff is overstaffed, the structure is duplicated, and the proportion of non-profit assets is high. It is a well-known fact that the service quality is low. In this case, if a large number of foreign banks enter China, the size of the existing four major commercial banks will be forced to shrink, and the phenomenon of bank layoffs will also be widespread. The average number of employees of the four major commercial banks is three times that of the United States, 27 times that of Japan, 9.5 times that of Germany and 4.8 times that of Britain. Such a huge labor force leads to inefficiency, overstaffing and high labor cost.

Judging from the situation in recent years, the financial transparency of China's banking industry is decreasing day by day, and the phenomenon of tampering with figures and making false reports in the four major commercial banks is particularly serious. In a relatively closed system, various contradictions can be easily covered up, but when the business share of foreign banks reaches a certain proportion, their accounting, reporting and statistical systems will be transparent to the international community. If the four major commercial banks do not pay attention to high transparency and strengthen internal control and supervision mechanisms, they may accumulate systemic financial risks and lead to the collapse of China's banking industry.

Second, the opportunities facing China's banking industry

After China's entry into WTO, China's economy is rapidly integrating into the world economy, which provides a broader development space for the development of domestic commercial banks. The entry of foreign banks and the opening of RMB business have greatly increased the opportunities for contact and cooperation between Chinese and foreign banks, and so on. All these aspects not only bring severe challenges to the state-owned banks, but also bring good opportunities for the development of the banking industry in China.

1. From a macroeconomic point of view, it can improve the operating environment of state-owned commercial banks and generate more financial business needs.

First of all, after China's entry into WTO, not only banks are facing competition from foreign banks, but also all domestic enterprises, especially state-owned enterprises.

Enterprises are also facing challenges from foreign products. This challenge urges these enterprises to accelerate the pace of reform, establish a modern enterprise system, speed up technological progress, strengthen internal management, and improve product quality and market competitiveness. Through measures such as merger, combination, reorganization, transformation and reorganization, high-tech and competitive enterprise groups will be formed to participate in the competition, which will drive some enterprises with current operational difficulties out of the predicament. In this way, the operating conditions of state-owned commercial banks have been greatly improved. Secondly, after China's accession to the WTO, the number of wholly-owned enterprises and joint ventures established by foreign enterprises in China has greatly increased. Relying on national reputation, financial strength and geographical advantages, state-owned commercial banks will also be favored by some foreign-funded enterprises, which provides more space for state-owned commercial banks to choose excellent credit customers. Thirdly, after China's accession to the WTO, there will be no more MFN treatment, textile quotas, dumping and anti-dumping. China's exports of textiles and household appliances have increased substantially, while imports of automobiles, telecommunications and agricultural products have also increased. As a result, China's international trade volume has increased rapidly, and the demand for international settlement, international card receipt and letter of credit business of banks has also increased greatly, which has put forward more demands in matching funds, foreign exchange trading, forward settlement and sale of foreign exchange, and interest rate exchange rate preservation. This provides a good opportunity for state-owned commercial banks to develop international business.

2. It provides opportunities for state-owned commercial banks to expand overseas financial business and realize transnational operation.

First of all, after China's accession to the WTO, the preferential conditions given by WTO members to banks in other countries should also be given to banks in China. It has solved the problems of policy obstacles and unequal competition treatment encountered by Chinese commercial banks in opening branches abroad. China's state-owned commercial banks can directly set up branches overseas to participate in the competition in foreign markets. Secondly, although the influx of foreign banks will make domestic banks give up a market after China's entry into WTO, multinational enterprises in China can also develop rapidly. After domestic enterprises go abroad, they also need domestic financial institutions to go out to serve them and compete for business in foreign markets. To be sure, after China's entry into WTO, the pace of transnational operation of state-owned commercial banks has been greatly accelerated.

3. It is beneficial for state-owned commercial banks to learn from the advanced management experience of foreign banks.

When foreign banks set up branches in China, there are both business competition and cooperation in supporting RMB business, local and foreign currency settlement and syndicated loans for large projects. Due to the short time of commercialization reform, the four major commercial banks were all national professional banks before 1995. 1995 after the promulgation of the law on commercial banks, they began to make a comprehensive transition to commercial banks. Although in recent years, state-owned commercial banks have vigorously promoted the commercialization reform, we have to admit that there is still a big gap between state-owned commercial banks and modern and standardized commercial banks in terms of organizational system, management system, management mode, operation mechanism and business innovation. The establishment and perfection of China's commercial banking system are still under exploration. The entry of foreign banks provides reference for the reform of state-owned commercial banks. We can learn from the mature management experience of foreign banks and accelerate the reform and development of state-owned commercial banks without leaving home. At the same time, it is also conducive to further promoting the reform of China's financial system.

4. Under the strong competitive pressure of foreign banks, it is conducive to promoting the state-owned commercial banks to change their operating mechanisms as soon as possible, strengthen their internal management and improve their management level.

Although since the reform and opening up, China has established a number of emerging joint-stock commercial banks such as China Merchants Bank, China Everbright Bank and Huaxia Bank. But this has not shaken the position of the four major commercial banks in commercial finance. One of the important reasons why the service quality of state-owned commercial banks is difficult to improve, the innovation motivation is insufficient, and the management mechanism is slow to change is that they have not met strong competitors. After joining WTO, according to the principle of national treatment, it is impossible for state-owned commercial banks to enjoy special policy protection. Therefore, under the challenge of foreign banks, state-owned commercial banks have to face the market and customers, actively carry out marketing, accelerate internal reform and improve their competitiveness. Otherwise it will be eliminated by ruthless market competition.

Third, the challenges faced by China's banking industry.

With China's entry into WTO, facing the powerful foreign banks, China's banking industry has felt great pressure. In order to be in an invincible position in the competition, China's banking industry must clearly understand the situation, take effective measures, meet the challenges and develop in the competition.

In the near future, after China's entry into WTO, it is inevitable that China's economy and banking will be impacted to some extent. We should take into account the negative impact of the full opening of the banking industry, among which the following issues are worthy of attention:

1, business scope

Since 1980s, western countries have emphasized financial liberalization, and banks have developed into universal banks, that is, the combination of deposit and loan business of commercial banks with securities issuance, underwriting and acceptance business of investment banks has become a worldwide trend. Including the United States and Japan, which have the strictest separation of banking and securities, have gradually relaxed the scope of banks and securities through various supplementary laws and regulations since the 1980 s, until recently the United States passed a new banking bill, which is a comprehensive affirmation of the development of universal banks. China's banking law adheres to four industries: banking, securities, trust and insurance. When the world bankers entered the reform and opening-up China in the form of universal banks, Japanese banks were following the old road of strict financial division between the United States and China, which was obviously incompatible with the general trend of reform and opening-up. After joining WTO, this contradiction is more prominent. Because foreign banks will rely on the business advantages of universal banks or a series of their subsidiaries to compete for customers, and our separate operation and management not only fetters our own hands and feet, but also hinders us from accumulating comprehensive service experience of universal banks. Trust industry, in particular, was originally a middle zone between banks and securities industry, with a wide range of business, and was called "financial department store" in the west. Banks in China can't run trusts concurrently, and the number of institutions in the trust industry is greatly reduced, which is managed by the central bank. However, securities impose many restrictions on the trust industry, such as not interfering with the issuance, brokerage and underwriting of securities. After China's entry into WTO, once foreign trust companies get involved in China, China's trust industry is bound to die out.

2, the problem of independent management

Foreign banks have the advantage of operating independently, while China's state-owned commercial banks are relatively weak. For example, foreign banks have greater autonomy in grasping the marketization of deposit and loan interest rates, and also have greater autonomy in withdrawing provision for doubtful debts amount and writing off bad debts. However, domestic banks have many restrictions, especially the write-off of bad debts requires the participation of many administrative departments. After joining WTO, these decentralized management can not be reformed, and in fact it has become an obstacle for domestic banks to participate in competition.

3. Talent competition

This is essentially a problem of labor remuneration, that is, the distribution system. Foreign banks can recruit people with high salaries, while domestic banks are characterized by egalitarianism. If there is no major breakthrough in the labor remuneration distribution system, it will be difficult to retain talents. After joining the competition, it will inevitably lead to the loss of many outstanding talents who have both foreign working experience and are familiar with the background of domestic customers and China institutions. These excellent talents will make the competition of foreign banks more intense. In fact, financial competition, to a large extent, is the competition of financial talents.

4. Financial instrument competition and financial innovation.

According to the information released unilaterally by the United States, foreign enterprises and foreign banks can get involved in consumer credit fields such as automobiles. This shows that foreign banks will intervene in the competition with domestic banks through some financial means that are mature abroad but have not been widely promoted in China. The gap in China lies precisely in the fact that under the planned economy system for decades after the founding of the People's Republic of China, we abolished commercial credit and consumer credit, prohibited credit sales and prepayments, prohibited commercial bills of exchange, and implemented the principle that all credit was concentrated in banks. Even after the reform and opening up, commercial credit and commercial paper have been restored, but there are still incomplete commercial credit and incomplete commercial paper and paper market (only bank acceptance bills, no public commercial promissory notes, in fact, bank credit bears the credit risk that enterprise promissory notes should bear), but consumer credit has not been pushed away (there is no consumer credit that manufacturers sell by installments on credit, but consumer credit is rashly promoted). After China's entry into WTO, foreign companies and foreign banks come to compete with us, and it is easy to make use of this gap in China's credit to make a fuss about consumer credit, consumer finance and consumer credit.

Fourthly, in the face of opportunities and challenges, China's banking industry's coping strategies.

Looking at the history of the world economy and the economic development of various countries, we can clearly see that no country can achieve better development in a closed and self-circulating state, especially in today's increasingly integrated world economic development. After China's entry into the WTO, in general and in the long run, it will be beneficial for China to gain comparative benefits in participating in the world economic division and cooperation, and for the development of China's banking industry. In the near future, it is inevitable that China's banking industry will be hit to some extent. Therefore, we must strive for time, actively take effective measures, accelerate the reform of state-owned commercial banks, fully face various challenges after China's entry into WTO, and minimize the negative impact brought by the impact of foreign banks.

1. Learn from the profound lessons of the Southeast Asian financial crisis and scientifically design the policy framework and steps of China's financial opening.

There are three problems to be solved: First, we should seriously grasp the strength and speed of China's financial industry opening to the outside world. Generally speaking, it is inevitable for China's financial industry to open to the outside world. However, as China is still a developing country, the financial system reform has not been fully put in place, the operating mechanism of state-owned commercial banks is not perfect, and the construction of financial legal system needs to be further improved. The modern enterprise system of enterprises, especially state-owned enterprises, has not really been established. If the financial market is opened too fast, it will have an unbearable impact on China's banking system and even trigger a major financial crisis. Therefore, in the process of WTO accession negotiations, China, while promising to fully open its domestic financial market, overcame its eagerness to achieve success, made full use of some protective clauses in the General Agreement on Trade in Services (GATS) and the New Financial Services Agreement (FSA), and gradually opened the financial market, so that the opening pace of the financial industry could adapt to China's legal construction, central bank's supervision ability and the reform of state-owned enterprises and commercial banks. Second, make plans to introduce foreign banks. In order to avoid blindness, specific plans should be made in terms of introduction time, annual introduction volume, introduction country, domestic regional layout after introduction, and how the central bank supervises it. Third, strict market access conditions. According to the international standards and the actual situation in China, the conditions for foreign banks to enter the China market are formulated and strictly examined. At the same time, with the large number of foreign banks entering, there will be the problem of foreign banks withdrawing from the market in the future, so laws and regulations on the withdrawal of foreign banks should be promulgated and improved in time.

2. Actively promote the transnational operation of state-owned commercial banks.

After China's entry into WTO, it is imperative to develop China's transnational banking industry. Otherwise, it is impossible to fully enjoy the benefits of national treatment and MFN treatment given by GATS and FSA in foreign financial markets. From the international experience, there are two ways for the development of multinational banks: enterprises infiltrate into financial companies or banking industries, and existing domestic banks set up branches abroad, or share or control other banks. The development of multinational banks in China has been faced with strong competitive pressure from multinational international banks from the very beginning, which requires our multinational banks to have a high starting point and high standards. Therefore, based on China's actual situation, we can choose to rely on state-owned commercial banks, give full play to their comparative advantages, and actively expand into the international financial field on the basis of existing business scope and operating performance. If state-owned commercial banks carry out joint-stock reform, they can adopt multinational enterprises

The form of participating banks has promoted the transnational development of state-owned commercial banks. In recent years, various signs of the development of the international financial industry show that international union and merger between commercial banks has become a new trend, and China's state-owned commercial banks should also make some achievements in this regard.

3. Accelerate the reform of state-owned commercial banks.

After China's entry into WTO, China's financial industry, especially RMB business, will open to the outside world, and there is still a buffer time. In the meantime, we must speed up the reform of state-owned commercial banks in the spirit of seizing every minute. First, accelerate the reform of the property rights system of state-owned commercial banks. It is necessary to reform the property right system of state-owned commercial banks, whether in order to improve the management level, operation level and competitiveness of state-owned commercial banks or to promote the transnational operation of state-owned commercial banks in China. On the premise of ensuring state holding, large enterprise groups and multinational companies are allowed to participate in shares, so that state-owned commercial banks can establish close credit partnerships with these enterprises and create institutional conditions for the final establishment of a modern commercial banking system. The second is to speed up the divestiture of non-performing loans of state-owned commercial banks and improve the asset structure of banks. At present, the burden of state-owned commercial banks is very heavy, especially non-performing loans. These problems are mainly caused by historical reasons. Without solving this problem, it is difficult for state-owned commercial banks to compete with foreign banks. At present, there are four asset management companies in China to deal with non-performing assets, but the more important problem in the future is to prevent the non-performing loans of state-owned commercial banks from "cutting and growing" like leeks in the vegetable garden. We must establish a mechanism to prevent non-performing loans and unplug "leeks". The third is to speed up the restructuring of state-owned commercial banks. According to the requirements of 1997 National Financial Work Conference, financial institutions should be established according to economic regions, branches of existing state-owned banks should be reorganized rapidly, especially county-level institutions of industry, construction and Bank of China should be merged rapidly, and efforts and financial resources should be concentrated on developing urban business and international business. To this end, the People's Bank of China merged with the people's banks of various provinces and set up nine branches throughout the country. The fourth is to implement and maintain the operational autonomy of state-owned commercial banks. Commercial banks carry out business activities in accordance with the provisions of laws and regulations such as the Commercial Banking Law and the Guarantee Law. No place or department, especially local party and government departments, can interfere in the business activities of banks, let alone force banks to lend or provide external guarantees. The central bank implements real asset-liability ratio management and supervision of commercial banks to prevent overload operation and liquidity risk, so that commercial banks can decide the use of funds independently and be responsible for their own profits and losses according to the principle of "three natures" of credit funds.

4. From the inside of state-owned commercial banks, we should actively take measures to deal with various challenges.

First, strengthen the staff's "customer-centered" service concept and improve service quality. At the same time, accelerate the process of e-banking construction in China. Through the advanced computer control system, on the one hand, the quality and efficiency of business are improved, on the other hand, the risk monitoring mechanism is improved. Second, learn from and introduce the advanced experience of foreign counterparts, accelerate financial innovation, change the current situation of single, similar and low-level competition in financial products of commercial banks, and actively develop new service products to meet the needs of customers at different levels for financial services. We will continue to develop business varieties such as forward settlement and sale of foreign exchange, foreign exchange trading and interest rate exchange rate hedging to meet market demand. At the same time, it is necessary to establish an overall marketing mechanism that is compatible with the market economy, increase the marketing efforts of financial products, and actively recommend and sell their services to customers. Third, adjust credit investment in time, seize new growth points and actively develop outstanding customers. It is necessary to systematically analyze the impact of China's entry into WTO on major customers of banks, re-evaluate the credit status and industry risks of customers, and take measures to prevent risks and improve asset quality. Fourth, pay close attention to personnel training and train professionals who meet the needs of the international financial market as soon as possible. We should cherish the existing talents, recruit senior talents with high salaries, actively introduce foreign intelligence, and actively create conditions for them to play their roles.

5. Establish an insurance mechanism for financial institutions' market withdrawal and merger and reorganization.

With the entry of foreign banks and the intensification of domestic banking competition, some commercial banks will go bankrupt and withdraw from the financial market. Therefore, it is necessary to establish a deposit insurance system to protect the legitimate interests of depositors. Merger and reorganization between domestic commercial banks has become the development trend of commercial banks in western developed countries. In the past two years, commercial banks in the United States, Japan, Britain and other countries have merged in succession to enhance their competitiveness and anti-risk ability in the international market through complementary advantages. After China's entry into WTO, commercial banks are facing the competition from foreign "super banks". Under this pressure,

The joint reorganization of commercial banks in China will also appear. Therefore, the state should formulate policies and regulations as soon as possible to regulate the merger and reorganization of domestic banks.

6, the central bank should strengthen the guidance and supervision of foreign banks.

In order to develop healthily and stably under the macro-control of the state, foreign banks must carry out necessary scientific supervision according to law, strengthen guidance and improve the supervision mechanism. First, strengthen the legal system construction of scientific management of foreign banks and formulate relatively complete national regulations on the management of foreign banks as soon as possible. In accordance with the spirit of the Basel Accord, a scientific management system for foreign banks will be gradually established. Second, in order to open China's banking business conditionally and step by step, the opening procedures of foreign-funded banking business must adapt to the conditions of China's economic development. In terms of service types, the banking industry can first open international settlement, financial leasing, foreign exchange and its derivative business, the provision and exchange of financial information, and then open foreign currency deposits and interest instrument transactions. The liberalization of RMB deposit business, government bonds and RMB A shares should be carried out cautiously. Third, strengthen the effective protection of the government. When China joins the WTO as a developing country, it is necessary to make full use of the relevant provisions in the General Agreement on Trade in Services (GATS) and the new Financial Services Agreement (FSA) to protect the development of China's banking industry. On the other hand, we should learn from the experience of other countries' entry into WTO and reasonably and effectively limit the business scope and profit remittance of foreign banks. Fourth, many "super-national treatment" for foreign banks should be abolished or gradually reduced to create a level playing field for domestic banks; Strengthen the scientific supervision and management of foreign-funded financial institutions, strengthen training, and establish a number of foreign-related financial supervision and management teams with strong professional quality, decent style and responsibility.

After China's entry into WTO, it is undeniable that there is still a huge gap between China's banking industry and foreign banks in the current economic transition period, and the entry of foreign banks is not conducive to the survival of China's banking industry. At the same time, China's accession to the WTO will help promote the complete transformation of China's banking industry, introduce foreign capital, advanced business varieties and management experience, and strengthen the competition mechanism.

In a word, the road is tortuous and the future is bright. State-owned commercial banks should clearly understand the situation, seize the opportunity, continue to deepen reform, turn pressure into motivation, and face the opportunities and challenges brought about by China's entry into WTO with a brand-new attitude.

References:

[1] International Finance Research (2003. 1 1): Research on the Scale Development of China's Financial Industry (Xiong Deping)

[2] "Finance and Insurance" (2000.6438+0): "China Banking after China's Entry into WTO" (Liang Yanfen)