Bank of China Group Restructures ItselfIn preparation for fiercer competition both domestically and internationally, the Bank of China Group is speeding up its efforts to restructure so as to better position itself for China's imminent entry into the World Trade Organization (WTO)."Earnest efforts are being made in the restructuring and progress is well under way," said Lam Kwong-siu, deputy chief executive of the Bank of China Hong Kong-Macao Regional Office. But he did not specify a date for when the restructuring will be completed. Riding on the wave of a merger, the restructuring at the Bank of China Group in Hong Kong has been in full swing since 1999. The plan was formally approved by the central People's Bank of China in December 2000, and was granted "no objection in principle" from the Hong Kong Monetary Authority in January. "We still have to submit more detailed and in-depth reports and plans in accordance with the legal and regulatory procedures in Hong Kong and other relevant regions," said Liu Jinbao, chief executive of the Bank of China Hong Kong-Macao Regional Office. "Because of this, the detailed process and schedule are not fully under our control," Liu said at a press conference held in March to release the Bank of China Group's 2000 Annual Report. According to the company's statement, the restructuring plan is to combine the total assets and liabilities of the 10 member banks of the group including the Bank of China Hong Kong Branch, the Hong Kong branches of seven banks incorporated in Beijing such as Sin Hua Bank Ltd and Yien Yieh Commercial Bank Ltd to form a new bank which is incorporated in Hong Kong. The interests held by the Bank of China in the other two locally incorporated banks, the Nanyang Commercial Bank Ltd and Chiyu Banking Corp Ltd, will be injected into the new bank, with their becoming subsidiaries of the new bank. Nanyang and Chiyu will retain their licences and names, and will remain as separate legal entities. They will continue to maintain their close business relationship with the new parent bank. "This year, the restructuring of the Bank of China Group has already entered into a key stage which calls for detailed implementation," Liu said. Though the group is still encountering some difficulties, such as a relatively high percentage of non-performing loans, the overall operating performance has fundamentally improved, according to him. "In line with the restructuring, we have to further improve our development strategy so that we can cater to the increasingly sophisticated demand for value-added financial services from our diverse customer base," he said. According to Lam, individual financial management will become a business focus in the coming years. Local banks are expected to see increasing pressure on profit margins for their traditional businesses this year while loan demand is likely to stay weak and growth will be stunted by the global economic slowdown. Unlike in the United States, where banks have long imposed fees for services such as automated teller machines and face-to-face dealings with human tellers, routine consumer banking up to now has been largely free in Hong Kong. Banking giant HSBC Holdings said early this month that it will impose new monthly fees and slash interest paid to small depositors in Hong Kong. |
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