CCB to establish securities venture when ban is lifted
China Construction Bank, the mainland's fourth-largest commercial bank by consolidated total assets, plans to form a new securities company when domestic regulations allow it, chairman Guo Shuqing said.
The move would be another step to the bank becoming a diversified financial giant, a process already evident in its decision to revive its internal investment banking department under its new chief investment officer, Zhang Long.
Like many of its foreign rivals, China Construction Bank hoped investment banking would evolve into a key profit pillar, Mr Guo said last week.
Regulatory acceptance of the concept of integrated financial firms appears to be growing, but mainland rules still bar commercial banks from directly investing in securities firms.
China Construction Bank was forced to give up its 43.35 per cent stake in China International Capital Corp, the original Sino-foreign joint-venture investment bank, amid a restructuring before its US$9.2 billion Hong Kong initial public offering in October last year.
CICC was China's most profitable securities firm last year.
The bank decided to revive its internal investment banking unit shortly before the China Banking Regulatory Commission at the end of June allowed it and five domestic and foreign competitors to create a service that would pool assets from mainland clients for investment in offshore securities.
China Construction Bank plans to consolidate its remaining investment banking functions in the revived unit, and then the development and expansion of trust, asset management and leasing services.
'Next up would be a securities firm when the authorities allow us to do so,' Mr Guo said.
Initially, the bank may consider co-operation with CICC, China Jianyin Investment, a shareholder that took over its CICC stake after the financial restructuring and China Cinda Asset Management, the state-owned firm formed in 1999 to help the bank clear its stale loans.
Meanwhile, it plans to introduce a scheme to grant shares to 263,000 employees and set aside more funds for staff incentives.
The average employee received 88,000 yuan last year in salary, bonuses and benefits, the least among listed mainland banks, said a July 12 research note by ABN Amro analyst Simon Ho. Average staff pay levels were 25 per cent that of China Minsheng Banking Corp.
The employee share scheme might be capped at 1 per cent or 2 per cent of the bank's total share capital, Mr Guo said.
The scheme might buy blocks of existing H shares at a discount in the open market, chief financial officer Pang Xiusheng said.
