The China “Big Four” Banks
Hello, from today I will be publishing a little about what I research in the course of the economy. My goal it’s provide information about a contemporary issue not only in economics, but in other areas of the social sciences.
I am researching the internationalization of the Chinese currency, the renminbi (RMB). I’m publishing today about a peculiar subject of China economy, which are its large state-owned commecial banks. With the exception of chinese central bank, the People’s Bank of China (PBoC), there are four major banks, the so-called “Big Four”. These banks are strategically essential to the political goals of the Chinese government authorities and very important for the development of the Chinese economy.
Currently, in the People’s Republic of China, the “Big Four” commercial banks are: Bank of China (BoC); China Construction Bank (CCB); Industrial and Commercial Bank of China (ICBC); and Agricultural Bank of China (ABC). According to Banker Database, the four banks are in the Top 10 Banks of World in 2014 (Table 1):
According to some studies they dominate the banking sector not only in assets, but in terms of branches, employement, but specially in it presence on national deposits and loan rates. In terms of market share, their presence is of around 50% of the sector, in the past this number was higher, but the result of economic reforms enhance the presence of another banks, including foreign banks.
1- BANK OF CHINA(BoC):
First, the Bank of China (BoC) it’s founded in 1912, in order to replace the Imperial Central Bank, after the Republic of China was stablished. From 1912 to 1949 the bank served as a central bank, international exchange bank and specialised international trade bank. After the stablish of People Republic of China (PBoC) the bank became responsible for managing China’s foreign exchange operations and provided vital support to the nation’s foreign trade development and economic infrastructure by its offering of international trade settlement, overseas fund transfer and other non-trade foreign exchange services. In the economic reforms of Deng Xiaoping in 1970’s, the bank played a role as government strategy key in boost economic development, as foreign financing channel by building up its competitive advantages in foreign exchange business. In 1994, the Bank was transformed into a wholly state-owned commercial bank. In 2004, Bank of China Limited was incorporated and in 2006 the Bank was listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange respectively, becoming the first Chinese commercial bank to launch an initial public offering (IPO) and achieve a dual listing in both markets.
BoC it’s the most internationalized of chinese banks, with branches across the mainland China as well 41 countries and regions. The bank’s core business is commercial banking, including corporate banking, personal banking and financial markets services.
2- CHINA CONSTRUCTION BANK(CCB):
China Construction Bank (CCB) was founded in 1954 under the name of People’s Construction Bank of China. The initial bank’s function was administer government and disburse funds for construction and infrastructure of the state economic goals. In 1979, under the economic reforms, CCB gradually became a full service commercial bank following the establishment of China Development Bank in 1994 to assume its policy lending functions. In 1996 the bank’s name changed to China Construction Bank. In 2004, CCB was formed a joint-stock comercial bank following the China Banking Regulatory Commitee’s (CBRC) approval. In 2005, the bank was listed in Hong Kong Stock Exchange and in 2007 in Shangai Stock Exchange.
Currently, the three principal business segments: corporate banking, personal banking, and treasury operations. The bank it’s one of leaders in China in a number of products and services, including infrastructure loans, residential mortgage and bank cards.
3- INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ICBC):
The Industrial and Commercial Bank of China (ICBC) its the largest bank in terms of total assets and by market capitalization. It was founded in 1984 as a limited company.
In 2006, another ICBC feature was the world’s largest IPO, when the bank was listed in Hong Kong and Shangai Exchange Markets. China’s largest commercial bank was also the first company to debut simultaneously on both the Hong Kong and Shanghai stock exchanges.
Through its continuous endeavor and stable development, ICBC has developed into the top large listed bank in the world, possessing an excellent customer base, a diversified business structure, strong innovation capabilities and market competitiveness. Bank’s has its presence in six continents, and its overseas network has expanded to 41 countries and regions.
4- AGRICULTURE BANK OF CHINA (ABC):
The Agricultural Bank of China (ABC) start with your predecessor, the Agricultural Cooperative Bank, in 1951. In the reforms of 1970’s the ABC has evolved from a state-owned specialized bank to a wholly state-owned commercial bank and subsequently a state-controlled commercial bank. In 2009 the bank was restructed into a joint stock limited liability.
In 2010, the bank was listed in Shangai and Hong Kong stock markets, completiting the transformation of ABC into a public shareholding commercial bank.
ABC capitalizes resources to the synergy between the Urban Areas and the County Areas. The bank tries to expand into the international market and provides diversified services so as to become an international first-class large-scale commercial bank. Capitalizing on the comprehensive business portfolio, extensive distribution network and advanced IT platform, the bank provides range of corporate and retail banking products and services for a broad range of customers and conducts treasury operations and asset management.
5- SOME FINAL CONSIDERATIONS:
The economic reforms adopted by China last years, promote financial internationalization. For example: some reforms even bring foreign financial institutions; reducing chinese state participation in the asset management of the largest banks; the incentive for action of national banks in other countries; and the pursuit of strengthening markets chinese capital. Thus, foreign capital began to present key importance to the growth strategies adopted by China.
However, the banking system still controled tightly by the government. Some actions of chinese autorities intensifies the banking regulation and stimulus to national banks, in order to don’t make China vulnerable to movements in the world economy (like in the 2008 crisis). In this aspect, the “Big Four” plays a major role in strengthen the domestic demand, by government budget, in order to promote projects like: expasion of industries; investments in R&D and technical progress; maintenance of bank credit level; economic relationship with developing countries; and maintenance of domestic consumption.
6- REFERENCES:
Bank of China Official Website [http://www.boc.cn/en/]
China Construction Bank Official Website [http://www.ccb.com/en/home/index.html]
Industrial and Commercial Bank of China Official Website [http://www.icbc.com.cn/ICBC/sy/]
Agricultural Bank of China Official Website [http://www.abchina.com/en/]
Top 50 Banks of World — The Bankers Database [http://www.thebankerdatabase.com/index.cfm/top50]
