chapter  5
14 Pages

Reform of state-owned commercial banks: from disposing of non-peforming assets to institutional reform

State-owned commercial banks (SOCBs) form the major part of China’s fi nancial system. Between 1998 and 2002, China’s SOCBs undertook a series of reform measures focusing on resolving the problem of non-performing assets. After 2003, the Bank of China (BOC), China Construction Bank (CBC), China Bank of Communications (BOCOM), and Industrial and Commercial Bank of China (ICBC) were restructured into joint-stock banks with the objective of establishing modern fi nancial institutions with a clear ownership structure and a good governance system. This has opened up the banking industry, developed banking regulation, and improved the fi nancial infrastructure. Notable achievements have also been made in the reform and development of state-owned commercial banks. However, the banks still face formidable challenges in the current environment of increasing customer demands and intensifi ed foreign competition. They will need to continue to improve corporate governance and strengthen their competitive capabilities in order to consolidate the achievements of reform.