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|Saturday, June 03, 2000, updated at 16:29(GMT+8)|
Bank Merger Called GroundlessA central bank official says that a Taiwan newspaper's report of a soon-to-be announced merger of three major Chinese banks -the Bank of China, China Construction Bank and China Everbright Bank - was groundless.
"The government has not considered it so far," said a senior official with the People's Bank of China (PBOC), the nation's central bank, who requested anonymity.
The recent Taiwan newspaper report said China's central government has decided to merge the three banks into a "mega-China Construction Bank" with total assets of 600 billion yuan (US$72.23 billion), and make it one of the top 200 enterprises in the world.
"Big size alone is of no use," countered the central bank official.
The major task of China's commercial banks should be strengthening internal controls, reforming management structure, obtaining more assets, developing new products and expanding into new markets, the central bank official added.
The merger plan, the newspaper said, would be announced in mid-month.
However, a Bank of China official countered, "There is no such thing at present."
The newspaper said the three financial institutions' Hong Kong operations were to be merged into a new China Everbright Bank.
The central bank official said as China further opens its financial sector, its domestic banks are facing more challenges from foreign counterparts. But the challenge comes mainly from outflow of talented managers and staffers, which cannot be remedied through a simple merger, he said.
Furthermore, the central government has always encouraged competition between financial institutions, he said.
He added the merger rumour makes no sense because the Bank of China has enjoyed a long history and a widely recognized name that bank executives would not want to throw away.
The Bank of China is one of China's four largest State-owned commercial banks. The others are the China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China.
Established in 1912, it has become an international bank with capital assets of 2.9 trillion yuan (US$349.76 billion) as of the end of last year. It has been on the Fortune 500 list since 1989.
China Construction Bank has capital assets of over 2 trillion yuan (US$241.63 billion).
China Everbright Bank is a rising shareholding commercial bank under the China Everbright Group.
It has built itself into a diversified financial institution with bank, insurance companies, securities companies and asset management companies. Its capital assets totalled 162.6 billion yuan (US$19.59 billion) as of the end of last year.
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