BIZCHINA> Review & Analysis
Hopes and concerns for new postal bank
By Shi Weigan (China Daily)
Updated: 2007-01-24 10:24

On the very last day of 2006, theChina Banking Regulatory Commission(CBRC) officially approved the establishment of the China Postal Savings Bank.

The China Postal Group was allowed to establish the China Postal Savings Bank Co Limited as the sole founder and investor and the articles of association of the new bank also got a nod from the CBRC.

This answers questions about the reform of the country's postal group as well as the future of the huge deposits held by the current postal savings system.

According to the CBRC release, the China Postal Savings Bank will operate through the existing postal system and outlets, establishing internal controls and risk management systems according to the requirements of commercial banks. It will become a supplier of financial services with "abundant liquidity, stringent internal control, safe operation and strong competitiveness".

The Postal Savings Bank marks a success for now but several key decisions remain to be made.

The authorities have to choose the direction of reforming the country's postal service group. The new bank has to convince the CBRC that it is capable of management and risk control. The bank's founders need to determine the exact business scope and operation model for it to survive the intensive competition in the domestic financial market.

The speed of the authorities' carrying through all the necessary procedures indicates their commitment to starting the new bank. The CBRC approved starting preparation for the Postal Savings Bank in June 2006, six months before the bank formally got the go-ahead.

By the end of June 2006, the balance of postal savings was 1,516 billion yuan ($189.5 billion), accounting for 9.5 percent of national deposits.

The postal system has more than 37,000 outlets across the country, two-thirds in counties and rural areas. It has issued more than 100 million deposit cards, making it the third biggest issuer of deposit cards after theIndustrial and Commercial Bank of Chinaand theAgricultural Bank of China.

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