Agricultural banks in 16 cities of the Yangtze River Delta signed three agreements on Oct 18, according to which these banks will form a cooperative mechanism in banking businesses. The agricultural bank will consider promoting the mode nationwide should the operation of the community succeed. Other banks have intentions to form similar regional financial community.

This means the "regional financial " has finally taken a practical step. As the protection period for the finance industry shortens after China's accession to the WTO, the domestic banks are confronted with urgent tasks, i.e., how to lower bad debt rate, and enhance risk prevention capability. Due to restriction of regions, a bank's branches in different cities are not able to share important information like credit record and credit grade. The potential risks have aroused attention within the industry. Under such circumstance, the call to form "regional financial community" is getting louder and louder.

The agricultural bank's cooperative mechanism originates at the first conference for cooperation and development for the branches in 16 cities of the Yangtze River Delta held in Shanghai this April. At the conference, the branches in Shanghai, Jiangsu, Zhejiang and Ningbo are chosen as leaders that are responsible for drafting agreements of cooperation on product innovation and sharing, individual business, marketing and loan management.

The business scope of the 16 branches almost covers every major aspect of banking business. The agreement on products innovation and sharing, in particular, combine individual business, corporate business, and institutional business, international and intermediate business. In addition sharing of accounts credit is made effective as an appendix. This shows the cooperation among the 16 branches is no longer simple cooperation, but a new type of mechanism that is set to handle competition and financial risks and a mechanism that booms self-development. The agricultural bank's Shanghai branch is the first head of the mechanism.

The agricultural bank will give certain assistance in policy, resources and technology to the cooperative mechanism. When release policies and measures in the future, the agricultural bank will take the demands and practical situations of banks of the Yangtze River Delta into consideration, give them more rights in innovation and management; establish a transregional platform on which information of accounts' investment and operation will be shared; a regional network will be enabled. In addition, the agricultural bank will grant the branches at the Yangtze River Delta appropriate credit scale advantage under the premise of risk prevention and improve quality of assets, says Yang Mingsheng, president of the Agricultural Bank of China.

By People's Daily Online