China needs 3 to 4 world-class banks, McKinsey's Chairman of the Asia Region

Dominic Barton, McKinsey's Chairman of Asia Region noted in an interview with the Financial Times that he hopes three to four Chinese banks will join the ranks of the world's top ten banks ten years later.

Talking about problems of inland's banking industry, Mr. Barton said inland's banking industry lacks expertise in loan risk management. The execution of the correct decisions at headquarters level is restricted by the technical capability at the branch or sub-branch level. Take the retail banking sector as an example, the inland's banks have not established a complete and effective database for loan and credit. Over the past five years, the Chinese banking industry has witnessed great improvement in performance, but still performance of some banks were not good enough, especially those in rural regions.

However, Mr. Barton feels optimistic for the future of inland's banking industry. He wishes to see three to four Chinese banks, one or two India's and five from Europe or North America in the top ten banks worldwide after ten years. He reckons this layout will best reflect the world economy's development.

Dominic Barton justifies his idea by citing the example of the Netherlands. The Netherlands, being a small country, owns two world-class banks. While at the beginning, most Dutch did not believe they could foster banks of world class. The government, therefore, should formulate plans for their banking industry's development. Fostering three to four world-class banks is absolutely possible.

Mr. Barton put forward some proposals for China too. He said China should maintain a pragmatic and opening attitude for its financial system. A master plan should be formulated to guide the cooperation between various departments, because many a department will be involved in the reform of financial reform. The timing for reform must be practical. Given the conditions of China's financial industry, the reform process from five to seven years will be appropriate.

By People's Daily Online