MPT arm to get banking licence
FOO CHOY PENG
China will soon establish its first postal savings financial institution under a plan that could further challenge the dominance of the state commercial banks.
Industry sources said the State Council had approved a proposal by the Ministry of Posts and Telecommunications (MPT) to set up a postal savings arm with a restricted banking licence.
An MPT spokesman yesterday confirmed that plans were under way to split the Posts and Savings Bureau (PSB), a department presently under its direct control, and develop it into a financial arm with expanded banking functions.
'We are looking into plans to set up a separate savings institution with more banking functions, but we would like it to ultimately come under the MPT,' he said.
A Shanghai Posts and Savings Bureau official said the People's Bank of China (PBOC) was exploring the best legal and organisational structure for the new arm although the MPT was fighting to take control.
Differences on the structure are believed to have delayed the establishment of the arm, which was to have been set up on July 1.
The bureau can now only collect deposits but is banned from extending loans.
Under the new plan, the financial arm could expand into the loan and mortgage business and invest its deposits more aggressively.
Beijing allowed the MPT to take deposits in the mid-1980s to subsidise its money-losing main postal services operations.
The deposits can only be placed with the People's Bank of China or channelled into treasury bonds.
Postal savings provide a good source of income for the MPT as the PBOC pays good interest on deposits, but as the savings volume increases, the central bank is reluctant to pay high interest payments.
Latest figures show that postal savings reached 230 billion yuan (about HK$213.67 billion), about 5 per cent of the country's total, and are still growing.
Analysts said it made sense to set up a separate financial arm along the lines of Singapore's Post Office Savings Bank that could focus on taking deposits which could be invested more aggressively.
'If it remains just as a tiny department under the MPT, as it is now, there is no way of making full use of the deposits,' a source said.
She said China was embarking on banking reforms to commercialise the state banks and having a new competitor would spur them to modernise their operations.
Beijing also hopes the setting up of a new postal savings arm can help to remove irregularities in the rural postal offices, many of which do not use proper accounting standards and thus are open to abuse by unscrupulous postal employees.
'A clear organisational structure for the postal savings arm will make checks and accounting much easier,' the source said.