First of all, the current impact
By the end of 10 in 2004, * * 62 banks from 19 countries and regions had set up 204 business offices in China, and 105 foreign banks were allowed to engage in RMB business, of which 6 1 were allowed to engage in RMB business of Chinese enterprises. At the end of 1 2004, the total assets of foreign banks in China reached 66.86 billion US dollars, accounting for about 1.8% of the total assets of banking financial institutions in China, and the loan balance was 32.3 billion US dollars. The market share of foreign exchange loans is 1.8%, and the NPL ratio is 1.3%. Pre-tax profit in the first 10 month. Foreign banks have become an important part of China's financial industry.
According to the current laws and regulations, foreign banks are still subject to some restrictions in fully launching RMB business. For example, you can only apply to set up a branch within one year, and it takes more than three years to apply for RMB business, and it has been profitable for the first two years. In terms of business scope, the RMB business that foreign banks can offer is also limited to: absorbing deposits from local enterprises, foreign-invested enterprises, foreigners and people from Hong Kong, Macao and Taiwan, issuing loans, accepting and discounting bills, providing letter of credit services and guarantees, and handling domestic and foreign settlements and transactions. Acting as an agent to buy and sell foreign exchange and engage in foreign exchange and interbank lending. Due to various restrictions, the scale of RMB business of foreign banks is still small, but foreign banks have expanded rapidly, and the total RMB assets have increased rapidly at a double-digit rate every year in recent years.
As far as retail business is concerned, personal foreign exchange business was opened to foreign banks when China joined the WTO in 200 1. Non-resident RMB business is open to foreign investment while opening RMB business; The RMB business of domestic residents will not be opened until after 2006. Before 2006, the influence of foreign banks on the retail business of Chinese banks was limited to personal foreign exchange business. In this regard, foreign banks have begun to appear. All branches of HSBC in China 10 have launched foreign exchange business for domestic residents. In 2004, the market share of Xiamen 1 1 foreign banks' personal foreign exchange remittances reached 23.9% and 49.7% respectively, while HSBC accounted for 8.5% and 20.8% respectively, and its market share was only lower than that of China Bank. In the personal foreign exchange financing business based on foreign exchange derivatives, foreign banks are also eroding the market share of high-end personal foreign exchange customers of Chinese banks.
The retail business of RMB is more attractive and challenging for foreign banks. The rapid expansion of foreign banks in RMB business and personal foreign exchange business may be repeated in the future in RMB business for domestic residents.
Second, the future competition situation
With the approach of the full opening of China banking industry to foreign investment in 2006, foreign banks with high hopes for the mainland retail business market have accelerated their layout in China market. The competition between Chinese and foreign banks will evolve from peaceful coexistence to more confrontation, and the competition between the two sides in retail business will be more intense around customers, products, channels and talents.
In terms of customers, at present, the customer groups of foreign banks are mainly foreigners in China. In the future, China people from Hong Kong, Macao and Taiwan will be concentrated in the high-income classes of wealthy cities in China, such as private entrepreneurs and senior managers.
In terms of products, at present, the business focus of foreign bank companies is mainly financing and international settlement. Deposit and loan, guarantee, remittance and other business aspects. In recent years, foreign banks have put more than 65,438+000 products and services into the China market, which is more than three times that of domestic commercial banks, showing the advantages of foreign banks in product research and development and innovation. In personal banking, foreign banks are good at providing credit cards, private loans, mortgages, deposits and wealth management services, and the profit ratio created by retail business often exceeds 50%. In the future, foreign banks will make full use of their technology, experience, brands and talents to innovate and promote more products.
Chinese banks will be greatly impacted in the following aspects:
(1) Personal Finance Business
Ordinary retail financial business depends on the support of institutional outlets, and foreign banks will focus on the competition of high-income groups from the perspective of labor costs and other interests. Since 2002, foreign banks that have been allowed to operate personal foreign exchange business have set up wealth management centers in succession to grab the attractive cake of high-quality customers through private wealth management business. Citibank. Foreign banks such as HSBC, Standard Chartered, East Asia and Hang Seng. A wealth management center has been set up in China to provide customers with complete services, including marriage, funeral, education, health insurance, property investment management, moving, travel and retirement plan management. Although foreign banks with universal banking system can't give full play to their advantages in the mixed operation of banking, securities and insurance in China, they have brand-new investment ideas. Mature wealth management tools, professional financial talents and rich operational experience make foreign banks very familiar with the field of personal finance, and its entry will certainly accelerate the loss of high-quality customers of Chinese banks.
(2) Foreign exchange trading business
By the end of June 38+ 10, 2004, the national foreign exchange deposits had reached158.4 billion US dollars, including 83.6 billion US dollars in foreign exchange savings deposits of residents. The drastic change of exchange rate and the frequent adjustment of foreign currency interest rate make residents and banks have the need to start personal foreign exchange transactions. In 2003, the "Woori Account" of Citibank and the "Huili Account" of Standard Chartered Bank have been tried out in big cities such as Shanghai. After the CBRC issued the Interim Measures for the Administration of Derivatives Trading in Financial Institutions in 2004, 24 banks, including Citigroup, Standard Chartered and HSBC, successively obtained derivatives qualifications, and BNP Paribas also set up a trading room in Shanghai. Foreign exchange structure products introduced by foreign banks have caused the loss of foreign exchange savings of Chinese banks. In the increasingly important personal foreign exchange trading market, foreign banks have an advantage, while Chinese banks do not have the ability to independently develop and manage derivative products at present, and they can only act as sales representatives of foreign banks' products in a back-to-back way, which is inevitably subject to people.
(3) Credit card business
Credit card is the most frequently used financial product for customers and the best carrier of new products for banks. China's credit card market is very attractive to foreign banks. At present, the CBRC is working with relevant departments to draft regulations on the management of bank cards to promote the card-issuing business of foreign banks. Before being allowed to issue cards separately, foreign banks have joined hands with domestic partners to enter the credit card business. Following the establishment of strategic alliance partnership between Citigroup and Shanghai Pudong Development Bank in 2003, Shanghai Pudong Development Bank officially launched the first dual-currency credit card with management and technical support from foreign banks in the Mainland in February 2004, which marked the formal intervention of foreign banks in the credit card market in China. On June 5438+February, 2004, Citibank Pudong Development Card changed its condescending attitude and announced that it would lower the application threshold for Puka and Gold Card, and expand the issuing city from Shanghai, Shenzhen and Guangzhou to 10 city. In addition, the Shenka International Credit Card jointly created by HSBC and Shanghai Bank and the Industrial Credit Card jointly created by Industrial Bank and Hang Seng Bank also appeared in 2004. After HSBC took control of Bank of Communications in August 2004, the two companies jointly established the Pacific Credit Card Center, which is expected to start issuing cards in the first quarter of 2005. From June 5438 to February 2004, American Express also cooperated with Industrial and Commercial Bank of China to launch Peony Express Card.
Joint card issuance enables foreign banks to bypass the restrictions of RMB objects and regions and enter the RMB retail market ahead of time, which brings pressure to other Chinese banks. Foreign banks have achieved the goal of familiarizing themselves with the domestic market through cooperative card issuance, and made market preparations for independent card issuance in the future. Brand and publicity, etc. At present, the UnionPay gold card project in large and medium-sized cities across the country provides convenience for all banks accessing the network to enjoy outlets and equipment resources. After issuing cards independently by foreign banks, the time and cost of laying domestic networks can be saved, and the competition for credit cards will become more intense.
(4) Personal credit business
In recent years, people's consumption concept and consumption structure have changed greatly, and the business volume of bank consumer credit has also shown an upward trend. Personal consumption credit is still in its infancy in China, and there is great room for development. Foreign banks have advantages in building mortgage, auto finance and other businesses. At present, foreign banks such as HSBC, Standard Chartered, Citigroup and East Asia have launched mortgage loans for foreigners in Beijing, Shanghai and Hangzhou. With the tightening of China's real estate credit and the increase of interest rate, foreign banks account for half of the export real estate mortgage loans in some cities with the advantages of low loan interest rate, flexible loan ratio and term, many optional currencies and perfect service. In terms of auto finance, Volkswagen Finance Company and SAIC-GM Finance Company started to operate in 2004, and three other auto finance companies are also under construction. After foreign banks were allowed to provide auto loans to individual residents in China in 2006, Chinese banks will face the risk of further business losses.
In terms of channels, foreign banks will increase outlets, start online banking and acquire domestic banks to enhance their penetration into the personal banking market. In terms of increasing outlets, HSBC, East Asia. The number of Standard Chartered branches in China ranks in the top three, with Bank of East Asia taking the lead in setting up Luohu branch in Shenzhen, which indicates that foreign banks have begun to enter the retail market in Shenzhen. In addition, three foreign banks, such as Citigroup, Standard Chartered, East Asia and HSBC, are allowed to provide comprehensive online banking services, and online banking has become an important marketing tool for foreign banks. In terms of entering the market through mergers and acquisitions, foreign banks are no longer limited to local financial institutions such as city commercial banks. At the end of 2003, Hang Seng Bank took a share in Industrial Bank, and in 2004, HSBC acquired a share in Bank of Communications and sent management personnel, thus gaining access to the mainland retail business market to a certain extent.
III. Countermeasures and Suggestions
After 2006, domestic banks will face fierce competition from foreign banks in the retail business market. During the short transition period, Chinese banks must take precautions, adjust in time, and actively respond to the competition and cooperation situation after the full opening of the domestic banking industry.
(A) a clear understanding of the situation, diligently practice internal strength, and fundamentally enhance competitiveness.
Network of branches all over the country. The huge customer base and understanding of China local culture have always been considered as the advantages of Chinese banks, but Chinese banks can't sit back and relax. From the perspective of branch network, foreign banks do not need to establish a national branch network to carry out retail business. Foreign banks can gain a sufficient number of customers by setting up limited branches in densely populated and economically developed cities in China. The expansion of electronic trading channels such as online banking and participation in Chinese banks have further made up for the disadvantages of foreign bank outlets. In terms of customer groups, foreign banks mainly aim at high-end customers who can really bring profits, and the loss of 20% of high-end customers is enough to shake the profit base of Chinese banks. On the understanding of local culture in China, foreign banks gradually integrate into the local area through the localization of employees, and the advantage of integrating Chinese and western cultures lies in expanding white-collar workers. It has more advantages in high-end customers such as elite students studying abroad. In 2004, the business management department of the People's Bank of China conducted a survey on the competitiveness of Chinese and foreign banks in Beijing. Results The top four state-owned commercial banks were ranked at the bottom, and the top 12 were all foreign banks, while Standard Chartered Bank, credit lyonnais Bank and HSBC Beijing Branch were ranked at the top. Chinese banks need to have a correct understanding of their own competitiveness, learn from foreign banks' good corporate governance structure, strict internal control system and rich risk management experience, mature product innovation mechanism and effective customer service model, adjust their strategies in time, and fundamentally improve their competitiveness.
(2) Implementing the customer strategy and strengthening the service for individual high-end customers.
Many foreign banks have their own clear market positioning and target customers, and accordingly formulate and implement corresponding product, marketing, pricing and service strategies. For example, Citibank charges service fees for customers with account balances below $5,000, and locks its retail business in high-end customers. In contrast, most Chinese banks lack clear market positioning, and their products are similar. Chinese banks need to pay attention to specific links and specific customer groups in the value chain of retail banks, especially to serve existing high-end customers.
In terms of serving high-end customers, foreign banks have mature experience in wealth management and private banking, while Chinese banks have gradually realized the importance of serving high-end customers under the pressure of competition in recent years. Financial centers are easy to buy in hardware, but it is difficult for Chinese banks to upgrade in software such as talents and service mechanisms in the short term, and the domestic financial industry implements strict separate operations. Under the separate operation mode, the so-called financial services mostly stay at the primary level of conceptual packaging, and it is difficult to provide comprehensive expert financial services for high-end customers. Chinese banks need to highlight the development of wealth management business in the future. In addition to building a personal wealth management center to provide comfortable and convenient service environment for middle and high-end customers, it is also necessary to improve business philosophy.
Innovative wealth management products, internal institutional setup. Strive to improve the service to high-end customers in personnel training, assessment and motivation.
(3) Pay attention to the innovation and integration of personal products and provide customers with comprehensive services.
Retail finance involves different businesses and channels. At present, most Chinese banks are composed of credit card department, private customer department and electronic banking department. The personal credit department operates separately from other different departments, and all kinds of businesses use different systems, which leads to the internal inability to enjoy information and affects the comprehensive service to customers. In the future, it is necessary to strengthen coordination and cooperation within banks, change the fragmented situation of retail systems such as savings, bank cards and retail loans, realize the transformation from product-centered to customer-centered, complete the transformation from savings business to personal comprehensive financial business, and provide all-round and comprehensive financial services for individual customers.
(d) Improving the development and management of human resources.
In the final analysis, the competition in the banking industry is the competition for talents. With the deepening of opening RMB business to foreign banks, the competition for talents between Chinese and foreign banks will intensify. Preferential treatment and effective incentive mechanism of foreign banks. Good career development prospects are more attractive to financial talents. While adjusting institutions and personnel, Chinese banks must strengthen the use and management of business backbones and management talents, establish a reasonable incentive and restraint mechanism, stabilize the staff and provide cohesion for internal talents.
(5) Choose suitable partners to achieve a win-win situation in competition and cooperation.
While competing, Chinese and foreign banks also have the opportunity to cooperate in business, technology and equity. In terms of business and technical cooperation, Chinese and foreign banks have their own strengths, and both sides can learn from each other's strengths. Automobile mortgage, mortgage securitization and disposal of non-performing assets still have a broad space for cooperation. Some domestic banks have made progress in this regard. For example, in 2002, Taiwan Province CITIC Bank and China Merchants Bank jointly established a credit card center in Shanghai, and CITIC Ka Wah Bank (Hongkong) and CITIC Industrial Bank jointly established a credit card center in Shenzhen.
In terms of equity cooperation, the capital of Chinese banks is generally insufficient. Introducing foreign strategic investors can enrich capital and improve corporate governance structure. At the same time, it can also absorb the advanced management concepts, financial technology and talents of foreign banks, establish a modern enterprise system as soon as possible, and improve the management level of banks. By holding shares in Chinese banks, foreign banks can reduce the time and capital cost of setting up branches in China, and gain the marketing network, customer resources and local currency base needed for retail business. The cooperation between the two parties has also been encouraged by the banking supervision department of China. After the China Banking Regulatory Commission increased the shareholding ratio of a single foreign-funded institution to a Chinese-funded bank from June, 5438 to February, 2003, foreign-funded financial institutions gradually transitioned from the initial shareholding in city commercial banks to joint-stock commercial banks and wholly state-owned commercial banks, and Industrial Bank and Bank of Communications successively introduced foreign strategic partners. In addition to participating in existing banks, Chinese and foreign banks can also establish new banks through joint ventures. For example, at the end of 2003, China Construction Bank signed a joint venture agreement with Schwab Housing Savings Bank of Germany to establish Sino-German Housing Savings Bank. With the advancement of banking reform in China, the space for equity cooperation between the two parties is still very broad.
The five-year transition period determined by China when it entered WTO will end in 2006, and the comprehensive fair competition between Chinese and foreign banks will really begin soon. Chinese banks should seize the little time left, formulate and implement a clear strategy, enhance their competitiveness in an all-round way, and meet the arrival of the full opening of domestic banking.