Chinese state commercial banks face last-ditch battle: premier

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Last updated at: (Beijing Time) Sunday, March 14, 2004

Chinese state commercial banks face last-ditch battle: premier

Chinese Premier Wen Jiabao said Sunday that in recent years, the state-owned commercial banks have made some progress, but problems are numerous.

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Chinese Premier Wen Jiabao said Sunday that in recent years, the state-owned commercial banks have made some progress, but problems are numerous.

When answering a question from a journalist of the South China Morning Post, Wen said the biggest problem existing in China's banking system is that the ratio of non-performing loans (NPL) is high, which has reached nearly two trillion yuan, accounting for 20 percent of the total.

He also said that nowadays the state-owned banks do not perform very well. The fundamental reasons lie in institution and mechanism.

The central government has made a decisive move on adopting a share-holding reform in Bank of China (BOC) and China Construction Bank (CCB) and has injected 45 billion US dollars of capital in the banks. The measures have received generally positive response from home and abroad.

"I want to make clear that the banking reform we took this time is to really push our state-owned commercial banks to be the real modern commercial banks," he pointed out.

He said the leadership of the two banks must take measures to ensure the safety of the capitals injected by the state, at the same time shoulder the responsibility of lowering the NPL ratio.

He also said the management and the competence of the staff inside the state-owned banks is key to the success of the banking reform.

"This is our last-ditch battle. We could not afford any failure.We must take decisive measures to ensure a successful reform," he stressed.

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