Bank cuts ties with economic entities
( 2004-01-10 14:49) (Xinhua)
The Bank of China, a leading
State-owned bank, said Saturday it has cut ties with 1,155 economic entities it
set up years ago, and disposed of 72.4 billion yuan (8.8 billion US dollars)
worth of non-performing assets by the end of 2003.
Sources with the bank said the Bank of China recovered 28.9 billion yuan (3.5
billion US dollars) in cash from its domestic non-performing assets and 337
million US dollars from its overseasnon-performing assets.
The bank has canceled 35.8 billion yuan (4.3 billion US dollars)worth of bad
loans and disposed of 9.6 billion yuan (1.1 billion US dollars) worth of assets
used by its debtors to pay back its bank loans, a leading bank official said.
The official said the bank has lowered the ratio of non-performing assets to
total assets, part of the efforts by the bankto restructure. The State Council,
China's cabinet, has decided toallocate 45 billion US dollars of the nation's
foreign exchange reserve to supplement the capital of the bank and China
Construction Bank in a bid to make them modern banking companies, featuring
sufficient capital, strict internal control, safe operations, good service and
good economic returns.
The two banks are required to launch financial regrouping, solve the problem
of bad assets, increase the ratio of capital sufficiency, lay a solid financial
foundation, and set strict financial standards under the government's plan.
The two banks, the Industrial and Commercial Bank of China, andthe
Agricultural Bank of China are China's four solely state-ownedcommercial banks,
which have dominated the country's banking sector during the past several
decades, but they have a high ratioof bad assets and low capital sufficiency,
due to structural flawsand historical factors.
Controlling up to 70 percent of domestic market shares, the four banks were
forced to take active measures to enhance their competitiveness, focusing on
reducing their average non-performingloan (NPL) ratio to less than 15 percent by
2005, or an annual drop of 3-5 percentage points.
China has an additional 11 joint-stock commercial banks, more than 100 city
commercial banks and thousands of rural credit cooperatives.
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