Lenders gear up for competition over private banking
By Wang Zhenghua (China Daily)
Updated: 2006-09-26 13:50
SHANGHAI: Domestic lenders and their overseas counterparts are facing harsh
competition in the private banking and wealth management sectors, which will be
deregulated at the end of 2006.
Bankers and scholars yesterday said a
reshuffle in the sector is unavoidable and domestic players, even though doing
their utmost to maintain their grip, are likely to lose affluent customers to
their foreign competitors.
But participants at yesterday's China Private
Banking and Wealth Management Forum did say that even with their
advantages in experience, funds, personnel and technology, foreign banks will
still need three to five years to get accustomed to the changing Chinese
market.
Competition is expected to mainly focus on the 20 per cent of
affluent customers who contribute 80 per cent of revenue for banks, said Li
Ruoshan, a professor with Fudan University's School of Management.
"And
apparently foreign banks have an edge in the sector," he said.
But he was
quick to add that "foreign lenders will be not 'acclimatized' for about three to
five years" because of the lack of transparent information, mature inner control
system, and sound credibility system in China and a rigorously regulated market
environment.
Lin Yongyuan, deputy general manager of personal banking at
the Shanghai Pudong Development Bank, said domestic players are actively
preparing.
He said domestic and foreign lenders will have equal
opportunities when the financial sector fully opens up.
"It's likely
domestic banks are not yet fully geared up, but I am sure they are busy
preparing," he said.
In terms of foreign players, he said overseas
lenders also lack confidence about deregulation.
"Foreign banks are
researching how to acquire a bigger share of the market, and studying to what
degree the banking regulators will open the market," he added.
"Local
banks have the home arena advantage," said Zhao Xinge, associate professor of
finance with the China Europe International Business School.
He said the
renminbi is not a freely converted currency, which puts a major obstacle by the
way of business expansion by foreign banks. (For more biz stories, please visit Industry Updates)
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