The Shanghai-listed China Merchants Bank has selected a foreign partner with which to launch a fund management company, according to Tuesday's China Daily.

"A certain foreign stake (in the to-be-launched company) has already been included in our application submitted to the relevant authorities," bank president Ma Weihua told the newspaper, but declined to name the foreign partner.

He said his bank is fully-prepared for the move and the application meets all government requirements.

Ma said structure readjustment - an effort to squeeze the ratio of credit in total assets - is the tune his bank is dancing to.

In 2003, Ma's bank saw a 34 percent rise in net profits which amounted to 3.445 billion yuan (415 million US dollars), while its bad-loan ratio declined by 2.84 percentage points to 3.15 percent.

The 1,000-staff branch generated 1 billion yuan (120 million USdollars) in revenue last year while its bad-debt ratio was a mere 0.3 percent.

"All the commercial banks are scaling back their pace of growth due to capital restraints and readjustments in credit structure," he said.

Last year, the bank issued 6.5 billion yuan (783 million US dollars) of convertible bonds and 3.5 billion yuan (421 million USdollars) of subordinate bonds to increase its capital adequacy ratio.

However, experts say intermediary banking will become a new focus of competition as the profit margins of loans and deposits shrink.

Source: Xinhua