China's rapid emergence on the world economic stage is resulting in a
quickening of domestic reform and is pushing change into new sectors of the
economy, said John Mack, chief executive of Credit Suisse First Boston.
As a result, China will benefit from a broadening of reform as, for example,
its insurance sector is reorganized as leading companies prepare for listings
abroad, he said.
Mack said his company is currently working with China Life, the nation's
largest life insurer, to prepare for the Chinese company's flotation, "hopefully
before year-end."
China Life has previously submitted applications to securities regulators in
both the United States and the Hong Kong Special Administrative Region.
China's largest property insurer - the People's Insurance Co of China
Property and Casualty Co Ltd - has reportedly scheduled a flotation for next
month in Hong Kong.
Mack added that rapid change in China is also spurring innovation among
banks. As an example of this, he highlighted an advisory agreement that Credit
Suisse First Boston signed with the Industrial and Commercial Bank of China
around three weeks ago to advise the bank on the domestic securitization of
non-performing loans (NPLs).
Regulators have still to approve the agreement.
The proposed transaction would be a landmark event because it would enable
the bank to remove part of its bad-loan risk from its balance sheet through
securitization. That would be a first for a Chinese bank, Mack said.
"We know that the NPL issue is a key one for China. Finding innovative ways
to resolve it is the type of thing investment banks will need to do to prosper
in China," he said in Beijing on Thursday. "China's companies and its government
are seeking tomorrow's solutions and are not afraid to break new ground."
Under the proposed agreement, Credit Suisse First Boston would purchase
non-performing assets worth a book value of US$300 million from the bank's
Ningbo branch in East China's Zhejiang Province. Credit Suisse First Boston
executives declined to disclose the price their company would be paying.
A few earlier non-performing loan projects involving foreign investors
progressed slowly, which was widely attributed to prudence on the part of
regulators.
However, Wei Christianson, head of China investment banking at Credit Suisse
First Boston, said: "Our feeling is, from last year till now ... there has been
considerable change in the policy."
