• Thu
  • Dec 25, 2014
  • Updated: 5:10am

Agricultural Bank to be reformed this year

PUBLISHED : Thursday, 06 March, 2008, 12:00am
UPDATED : Thursday, 06 March, 2008, 12:00am
 

Beijing has given top priority to restructuring the nation's policy banks, with officials saying Agricultural Bank of China's long-awaited reform will be completed this year.

Premier Wen Jiabao has nominated the revamping of Agricultural Bank and China Development Bank (CDB) as key reforms for this year, intensifying pressure on the lenders to become more market focused by listing shares and boosting capital adequacy.

'Agricultural Bank's reform must be completed this year,' said China Banking Regulatory Commission chairman Liu Mingkang after yesterday's opening plenary session of the National People Congress.

'Premier Wen has announced to the whole world that Agricultural Bank and [CDB] will be the focus of this year's sector reform,' he said.

Both policy banks' reform proposals had been submitted to the National People's Congress for approval, he added.

Policy banks, which support state development and infrastructure projects, are being transformed into more commercially orientated lenders as part of financial sector reform.

Agricultural Bank is the last major state lender still awaiting a government bailout.

Analysts said the bailout could exceed US$100 billion, with about US$40 billion expected to come from China Investment Corp, the sovereign wealth fund.

CDB vice-governor Liu Kegu said the lender was working out the details of its overhaul after the State Council recently approved the reform.

It is considering floating shares in Hong Kong and Shanghai, and expanding operations into rural areas and overseas.

The reforms would be finalised 'as soon as possible', Mr Liu said.

He said a key issue to be resolved would be how to balance social responsibility while operating as a commercial entity.

CDB had provided 1.7 billion yuan in emergency loans to southern areas of the country hit by snowstorms, he said.

'The emergency funding arrangement was started in 2003 when [Sars] erupted,' he said. 'The way forward for this initiative is a subject of discussion with the State Council.'

On the subject of loan growth, Mr Liu said the industry expected to see new lending this year maintained at a similar level to last year, implying the anticipation of a slowdown in lending expansion.

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