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China policy bank goes commercial

By Bi Xiaoning (chinadaily.com.cn)
Updated: 2008-12-16 11:32

China Development Bank Corporation was set up in Beijing on Tuesday, marking its change from a China policy bank to a commercial bank.

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On Dec 11, China Development Bank got approval from the State Council, or China's cabinet, to transform into China Development Bank Corporation, with registered capital of 300 billion yuan ($43.80 billion).

At the end of last year, Central Huijin Co, an investment arm of the government, invested $20 billion on China Development Bank. Central Huijin Co and the Chinese Ministry of Finance are the bank's two shareholders, each holding half of the bank's shares.

As of the end of 2007, the bank's total assets amounted to 2.89 trillion yuan, up 25.1 percent year-on-year. The bank realized profits of 29.6 billion yuan in 2007.

As for the timetable of when the bank would go public, experts said it still encountered many challenges.

Guo Tianyong, a banking expert at the Central University of Finance and Economics said, "The bank mainly relies on issuing bonds to raise money, so the source of capital is simple and the financing cost is high. Also, the bank doesn't have an operation network and the experience of doing retail banking business."