April 13, 2006

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China Post bank

Japan's last election was largely fought over the privitisation of Japan Post, the world's largest financial institution. The government has realised the massive Japan Post system has distorted its financial market thanks to its government backing. China, on the other hand, is going in the other direction. A small story in The Standard (no link) says:

China's deposit-taking postal system has started to extend small loans to individuals and businesses in the countryside for the first time as it prepares to evolve into the nation's fifth largest bank. Beijing approved a blueprint to turn China Post into a lender last summer, and state media have recently said the new bank will be set up soon.
Will this bank will be given a fighting chance, being able to lend money at market rates that reflect the riskiness of the customer? More likely it will become a tool of government policy now the government's grip on the big four banks has slipped thanks to their privitisations. Being optimistic, it could be the Chinese government's experiment in micro-finance. Pessimistically this bank will come under pressure from Beijing, provincial and local governments to lend on favourable terms to favoured clients.

It has cost China hundreds of billions to bail out the big four banks and prepare them for listings. Hopefully this new venture won't end up costing as much.

posted by Simon on 04.13.06 at 09:49 AM in the China economy category.


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Just another prespective.. China Postal has a very strong presence in the remote countryside, very often the postal office is the only place to get cash and do deposit -- geographically it seems to make sense for small business in countryside. I'm sure the remote villagers are happy to see China Postal to offer more services. Just my 2 cents...

posted by: winter on 04.16.06 at 01:20 PM [permalink]

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posted by: tom on 04.30.06 at 03:40 AM [permalink]

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