In a speech delivered at Beijing International Financial Forum on May 19, Liu Mingkang, Chairman of China Banking Regulatory Commission, reminded the audience of the fact that China's state-owned commercial banks would have to grow stronger with their market operation instead of relying on the government as they used to.

Looking back at measures taken to facilitate banking reform including capital injection and joint-stock transformation, Liu expressed his hope that the reform would have state-owned commercial banks "refreshed" and promote the construction of a "healthy and competitive" banking sector for China.

To this end, he claimed, the core of the reform lies in a good corporate governance, which can only be achieved by a systematic overhaul in the state-owned commercial banks, ranging from their architecture and management regimes to their operational mechanism.

And that's why China Banking Regulatory Commission, China's banking watchdog, formulated and promulgated a guideline on reform and supervision of Bank of China and Construction Bank of China, said Liu.

He pointed out two keys in this aspect: a healthy board of directors and hi-quality talents. He recognized progresses made on improving corporate governance among the banks.

He called for state-owned commercial banks to take concrete measures to solve the problems on the way to go public, such as information disclosure, transparency, protection of interests of small stockholders, etc.

Although he thinks it is too early to give a clear picture of the prospect of China's reform on its commercial banks, he is confident China's banking sector will march forward with more transparency, steadier operation and stronger competitiveness.

On one hand, the state-owned banks cannot rely on the government as they used to do. Instead, "they must learn to run their business independently on the market principle", said Liu. As a result, the information disclosure and marketization of China's banking sector will be greatly improved.

On the other hand, Liu said, having built an extensive network around the country, state-owned banks have a lot of advantages with their familiarity with the domestic market. He predicts most banks will secure their leading role in the banking sector with their upgraded risk control.

Liu also spotted out four factors indispensable for the success of the banking reform: the development of China's capital market, improvement of accounting rules, a reliant social credit system, and disposal of non-performing assets (NPA).

He concluded that China's banking reform, an ordeal as it is, would score a success if the main goal is stick to and every step is taken carefully.

By People's Daily Online