Banking watchdog to levy regulatory fees

China Banking Regulatory Commission (CBRC) decided on September 19 to collect regulatory fees, which are roughly estimated at 5 billion yuan this year. This might not be good news for major domestic banks, especially the four state-owned with great pressure. However, CBRC stressed that all kinds of the financial institutions in the banking circles under the supervision of CBRC will be charged annually.

Banking regulatory fees are in line with international practices. Previously China Securities Regulatory Commission (CSRC) and China Insurance Regulatory Commission (CIRC) have implemented such a system accordingly. The fees paid to CSRC will all be delivered to the state treasury.

The fees are composed of institutional regulatory fees and business regulatory fees levied on the basis of a certain ratio of paid-in capital to the total assets of the financial institutions. It is roughly estimated that 5 billion yuan will be handed to CBRC in 2004.

The 5 billion will mainly come from the four state-owned commercial banks: Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China. Based on disclosed information, the four banks need to pay 3.2 billion yuan. Moreover, Bank of Communications is supposed to hand in 225 million yuan.

China Merchants Bank, Shanghai Pudong Development Bank, China Minsheng Banking Corporation Limited, Hua Xia Bank and Shenzhen Development Bank need to pay totally 250 million yuan. Foreign-funded banks only need to pay 80 million. The fees will surely affect the profits of the banks. As to the state-owned banks, the fees are not cut for their low profits, because they are mainly based on the proportion of capital scale. Take Industrial and Commercial Bank of China, who boasts the largest asset scale, as an example, it needs to pay 867 million, which takes up as high as 35.06 percent of its net profit. However the amount out of the five banks mentioned above is only about 5.55 percent of their net profits in 2003.

Presently the four state-owned banks and Bank of Communications are actively preparing for going public. There is concern inside that the expenditure will reduce their profit rates and weaken their attraction to investors.

By People's Daily Online