Top Biz News

Post bank launches in Beijing

By Hu Yuanyuan (China Daily)
Updated: 2007-03-21 10:43

Postal Savings Bank of China, the country's fifth-largest lender with a focus on lending to rural clients, was officially launched in Beijing yesterday.

"The establishment of the bank will enhance the development of China's banking sector as well as the vast rural areas," said Liu Andong, chairman of the Postal Savings Bank, adding the inauguration marked a substantial step in China's financial reform.

Liu Andong (right), chairman of the Postal Savings Bank of China, unveils a plaque to inaugurate the new lender in Beijing yesterday. [China Daily]

But Liu declined to reveal more detailed business plans.

China's postal savings amounted to 1.7 trillion yuan by March, the highest after that of the Big Four banks. Its registered capital totals 20 billion yuan and the bank is fully owned by China Post Group.

The new bank was preparing to open branches and sub-branches in the first half of this year, the Shanghai Securities News quoted an unnamed source as saying.

"Compared with other banks, the Postal Savings Bank's striking advantage lies in its extensive outlets, which makes it more competitive in running retail and intermediary services," said an analyst with CITIC China Securities, adding the new bank would also improve financial services in rural areas by expanding financing channels.

The bank's 36,000 outlets across the country make it the most widely spread financial institution in China, and almost 60 percent of them are located in rural areas. In some out-of-the-way areas, post savings is the only financial service available.

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It was estimated that the country would need 15 trillion yuan to fund its new countryside construction by 2020, most of which would come from financial institutions. But the rural financial network and services in place in many areas would not be able to meet demand.

The China Banking Regulatory Commission approved the Postal Savings Bank last March to run micro mortgage loans, thus expanding post savings' capital flow into rural areas. By the end of 2006, the bank had offered over 320 billion yuan in loans to rural financial institutions.

But improving the risk control scheme will be the new bank's key challenge, experts said.

A number of its outlets are small-scale and use outdated technology, thus creating huge risk potential. For instance, some of its rural outlets have only three staff managing post, agent and saving services.