Guangfa Bank accelerates business transition

China Guangfa Bank Co Ltd, the only national joint-stock commercial lender not to have listed, is accelerating its transition towards becoming more of a full retail bank, with an upgrade of its wealth management services and the start of private banking by the end of the year.

With a minimum initial deposit threshold of 300,000 yuan ($47,000) for VIP clients, the bank said it will introduce more classification layers to its wealth management business, with its new "Premier Banking" operation, said Liu Weixing, head of CGB's Beijing branch.

The upgraded business will focus on asset allocation for families, with fee exemption for nearly 40 services, including healthcare, airport reception, and overseas study.

The threshold for its private banking service will be 6 million yuan, according to the bank.

Morris Li, the president of CGB, said demand for private wealth management services is expected to continue to grow by about 30 percent year-on-year in the future, regardless of economic cycles.

He expected growth of retail business this year would be higher than that of 2011. Last year the lender's personal loan business grew by 31 percent year-on-year.

Citigroup Inc became a major strategic cooperation partner for CGB after purchasing 20 percent of CGB's shares and got 100 percent operation and management rights over the domestic lender in 2006.

In 2011 CGB decided to set retail banking as a priority of its business development in the next five years, expecting retail banking to contribute as much as 50 percent of the total revenue.

"And we hope number of the VIP clients and assets under management could both double by the end of 2015," added Amy Choi, deputy president of CGB.

As of last year, total assets of the lender reached 919 billion yuan, up by 13 percent year-on-year. Its net profit surged by 55 percent to 9.6 billion yuan.

Its non-performing loan ratio stood at 1.34 percent at the end of 2011, down by 0.24 percentage point from one year earlier.

Guo Xiaoping, a former deputy president of CGB, said judging from the current situation of economy and the capital market, the lender cannot expect to be approved for IPO within the year.