THE Industrial and Commercial Bank of China (ICBC) is stepping up its internal reforms to improve its competitive edge after 1997. The chairman of the bank's Shenzhen branch, Wu Jiesi, said the bank was more worried about business activity after China resumed control of the territory than the recent nationwide clampdown on credit expansion. ''After 1997, Shenzhen will be much closer to Hong Kong and economic activities between the two places will become more frequent. How to maintain our competitiveness in such a market poses a major problem,'' he said. Meanwhile, the bank had not encountered any problems in recalling loans as ordered by the central bank, Mr Wu said. The People's Bank of China has instructed the recalling of all loans made to projects without the relevant authority's approval and those made outside the banking system. ''We don't have illegal loans. For loans lent outside the system which amounted to 800 million yuan [about HK$1.07 billion at the official rate], we have recalled about 90 per cent,'' Mr Wu said. He described the bank's Shenzhen branch as a full commercial unit, saying: ''We have almost no policy loans.'' ICBC is one of the four specialised banks in China which is given the dual role as a commercial bank and one that structures its lending in accordance with government policy. But the amount of policy loans differs from district to district. The main thrust of the bank's reforms is in personnel management. The aim is to achieve a system as close to its counterparts across the border as possible. ''From the beginning of this year, we have implemented an appraisal system for our staff. That means only those people who perform well will be promoted,'' Mr Wu said. Training would also be given to staff to improve their language skills. ''Since Hong Kong people speak Cantonese, we require all staff to be fluent in Cantonese as well as one to two other foreign languages such as English or Japanese,'' he said. Besides the reform for personnel, the bank is also updating its technology. ''We have invested about 100 million yuan to buy an advanced computer system. It is very up-to-date and there is no need to further upgrade the system in the next five years,'' Mr Wu said. The bank is also keen to convert its existing state-owned structure to a shareholding system. ''The Shenzhen city government has made such a request, but the conversion plan requires approval from the People's Bank,'' Mr Wu said. Once approval from the central bank was received, he said the bank would start work immediately to change the branch's holding structure. The Shenzhen branch has total assets amounting to about 18 billion yuan, with more than 2,500 staff and 88 offices.