BIZCHINA / Biz Life
Wanna financial supermarket?
By Hu Yuanyuan (China Daily)
Updated: 2007-03-08 10:29
We are accustomed to shopping in supermarkets to satisfy our daily needs.
Clothes, food, cosmetics, books, home appliances you name it, they have
it.
But have you ever dreamed of a financial supermarket? Money changers,
insurers, securities and fund management companies, all under the same
roof?
Ma Weihua, president of China Merchants Bank, the country's most
profitable lender, yesterday raised a motion in the Fifth Session of the
10th National People's Congress, pressing for a more comprehensive
management for commercial banks.
The reason is quite simple. With the marketization of interest rates and
more diversified direct financing channels, Chinese banks cannot rely on
the shrinking interest gap between loans and deposits as its major
revenue source.
They have to seek more growth points to drive their profits; and
insurance, funds and securities management, and financial leasing appear
to be perfect alternatives.
Meanwhile, with the opening up of the banking sector last year, Chinese
banks are faced with stiff competition from their foreign rivals whose
parent companies are usually financial holding firms, and thus excel in
offering more product variety.
So Ma Weihua has a good reason to insist that the bar in Article 43 of
the Commercial Bank Law, which was imposed in 1995, should be removed,
allowing banks to invest in or take a controlling stake in non-bank
financial institutions with the approval of regulators.
In fact, the government has given banks the green light to set up fund
management and financial leasing companies. But banks are now looking for
even bolder measures.
The financial supermarket, I believe, is just around the corner. But good
as it sounds, the risks of comprehensive management must not be
underestimated.
How to separate the risks of different units under the same umbrella will
be another big challenge for commercial banks to manage after the door is
pried open.
(For more biz stories, please visit Industry Updates)
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