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Huaxia Bank Pledges to Further Reform
Going public and becoming an international-standard bank is the plan of Huaxia Bank , one of the 10 nationwide shareholding commercial banks in China , according to a top official at the bank.
Its limited size used to be a disadvantage, the kind that had haunted small and medium-sized banks for years.
But now a more flexible structure and better management have put them in a better position than the bigger State-owned banks to move and run more quickly when the WTO wave triggers a reshuffling of China's banking industry, analysts said.
Securities regulators are making the shareholding banks a pilot for bank listing, which is still rare but is speeding up in China, while the central bank will also give them the green light to formally recruit foreign bankers.
Huaxia Bank was lucky to be chosen both to be listed and a bank of international standards, said bank Chairman Lu Yucheng.
Widely expected to be the first domestic bank to go public this year and the fourth bank ever to be listed in China, Huaxia's A-share IPO (initial public offering) preparations are going smoothly and it is hoped the listing can take place in the second half of the year, said Dr.Lu Yucheng.
The offering will be about 400-500 million shares. Proceeds will be used to increase the bank's cash flow and develop its online business and branch network.
But Huaxia is also brewing more long-term development plans, such as entering the overseas capital market.
"We hope to realize overseas listings in the next three to four years, including issuing H shares in Hong Kong and N shares in New York,'' said Dr. Lu.
"Listing is not just a way to collect money. What investors value is a sound corporate performance and future growth. And that is what we are trying to do,'' he said.
To prepare for the expansion, the Beijing-based bank will invite one or two world-famous foreign banks as its strategic investors.
Foreign stakes can be as much as 25 per cent of the bank, said Lu. Presently, about 90 per cent of the bank's stakes are controlled by State-owned firms.
"Absorbing more foreign investment will help us upgrade the structure of shareholders and corporate governance to become a real international-standard bank,'' said Lu.
Several big names are already in talks with Huaxia and showing strong interest in its plans, he said.
The bank also plans to recruit a foreigner to act as its vice-president.
The candidate must have senior banking experience in famous foreign banks and be familiar with the Chinese market.
He or she will be offered a high salary.
The move echoed Chinese Premier Zhu Rongji's remarks earlier this year to absorb more foreign talents to take up senior posts in the financial authorities to upgrade management and efficiency in the sector.
The unprecedented practice, which has permission from the central bank and the State Council, will be an example for other domestic banks to follow.
"We will also invite some renowned financial experts to become independent directors of the board,'' said Lu.
Some of them will be chosen from Hong Kong, the United States and European countries.
And more overseas talents will be recruited as senior consultants or managers for the bank's overseas business development and online banking construction.
"Foreign competition brought by China's WTO accession is forcing us to speed up renovation of products and management as well,'' said Lu.
"We are also trying to give more incentives for staff and make them more professional,'' said Lu.
Bank staff are already getting financial and English training in keeping with the new environment.
Employees with outstanding performances will receive awards while those who don't do very well will be demoted. Even bank presidents won't be spared from this.
Under such circumstances, the nine-year-old bank has experienced rapid growth over the past decade.
By the end of last year, Huaxia Bank boasted 95 billion yuan (US$11 billion) worth of total assets.
It saw a 755 million yuan (US$91 million) profit in 2000 , up 41 per cent from 1999. Its capital profitability stood at 21.3 per cent and its non-performing loan rate was only 5.33 per cent , well below the average level in China.
The bank predicted 150 billion yuan (US$18 billion) of total assets and a 1 billion yuan (US$120 million) profit this year.
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