Bank Association Nearing Debut

The long-awaited China Bank Association, a non-governmental organization that is to include major commercial banks, is scheduled to make its debut during the first quarter of this year, according to a spokesperson from the Industrial and Commercial Bank of China.

The plan, however, still requires the approval of the Ministry of Civil Affairs, the source told China Daily.

"It should open within the first three months of the year according to the central bank's plan," he added.

The association, which was first outlined by the central bank two years ago, may include four State-owned commercial banks - the Bank of China (BOC), the Industrial and Commercial Bank of China (ICBC), the China Construction Bank and the Agricultural Bank of China - as well as 10 other commercial banks operating nationwide.

The association's major function will be to co-ordinate the operations of the commercial banks to avoid malicious competition, he said.

Newly-appointed ICBC President Jiang Jianqing will become the association's first chairperson. The ICBC has taken part in the preparatory work of the association.

Although the bank source did not elaborate on the association's nuts and bolts, recent reports have quoted central bank governor Dai Xianglong as saying that it is "impossible in the near future for the association to decide the interest rate level."

BOC President Liu Mingkang also said although member banks will discuss an appropriate level for the interest rates, the final decision rests in the hands of the Monetary Policy Committee under the central bank.

The association will encourage experienced exchange and fair play between commercial banks and facilitate communication between the central bank and the commercial banks, Liu said. "We welcome and expect the formation of the association," he was quoted as saying.

The ICBC source said he had no knowledge on whether foreign banks will be included in the association, but industry insiders said that foreign bankers in China are also considering establishing a similar association to reflect the problems they have met when conducting businesses in China.

Reports also said policy banks and local commercial banks will not be included into the association.

But some economists said the association will not have much meaning as China's commercial banks have already been operating in an orderly environment.

"There is little malicious competition in the banking sector as all the banks are more or less regulated by the government," said Yuan Guangming, director of the macroeconomics study centre under the Chinese Academy of Social Sciences.

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