China may decide this week to set up a special agency to regulate lenders, the Xinhua news agency reported, a move analysts said is needed to stop more than US$357.6 billion in bad loans strangling economic growth.
A meeting from Jan. 22 to Jan. 24 may complete the split of the People's Bank of China, the nation's central bank, into one agency to set monetary policies and another to regulate banks, state-owned Xinhua said. Also on the agenda will be how to accelerate sales of the government's stakes in public companies and allowing insurers to go public.
China, which became a WTO member in 2001, wants to prod the nation's banks, brokerages and insurers to expand their capital, improve their management and prepare for competition with foreign companies such as HSBC Holdings Plc and Citigroup Inc.
The meeting is the "follow-through and part of the policies and initiatives set to reform the Chinese financial-services industry," said Wei S. Yen, who tracks China's banks at Moody's Investors Services in Hong Kong.
The meeting will also give approval for China Life Insurance Co, People's Insurance Co of China and other insurers to tap the equity market for capital, Xinhua said. Foreign insurers will also be allowed to expand their operations to more Chinese cities including Beijing and Chengdu, it said.
Foreign companies are moving in. Among insurers, American International Group, Allianz AG and others are vying for a greater share of this growing market against local companies such as China Life and Ping An Insurance Co. Among banks, Citigroup paid about 600 million yuan in December to buy 5 percent of Pudong Development Bank Co, while HSBC bought 8 percent of Bank of Shanghai in 2001.
That's part of the reason China's government wants to create a China Banking Regulatory Commission to push banks to better manage their risks.
Liu Mingkang (
Zhou Xiaochuan (周小川), who was China's securities regulator until last year, has been appointed the new central bank governor, with the task of setting the country's interest rates and foreign exchange.
Bad loans at China's banks are estimated to be about 2.96 trillion yuan (US$358 billion). Reducing that figure is vital to the government's efforts to keep its economy expanding at the 7 percent it says it needs to create jobs for the 8 million people entering the urban workforce each year.
In November, the three biggest banks, which account for 70 percent of the nation's lending, said they will shift lending to private entrepreneurs and a burgeoning middle class, as the nation's lenders struggle to reduce bad debts.
In the securities industry, a plan will be completed to help the government sell the estimated US$240 billion of non-tradable stocks that it holds, Xinhua said.
The industry will be regulated by former Agricultural Bank of China president Shang Fulin (尚福林), who has been named as the chairman of the China Securities Regulatory Commission.
Shang's task will be to improve discipline among more than 1,200 publicly traded companies in Asia's second-biggest equities market, as the government lets foreign investors buy and sell these stocks for the first time. One publicly traded company in every 10 was found in a survey last year to have doctored its financial records.
RSS