Beijing’s Financial Shufflle: Bankers or Regulators? 中国金融高层“大换血”
Beijing made a major shuffle of its top financial industry regulators over the weekend, underscoring once again why investors should think of China’s big 4 banks more as government policy lenders and not be deceived into belieiving they are real commercial banks. In a move that was rumored but finally made official on Saturday, top executives from two of the big 4 banks, Agricultural Bank of China (HKEx: 1288)(Shanghai: 601288) and China Construction Bank (HKEx: 939)(Shanghai: 601939), were named to head China’s insurance regulator and its securities regulator, respectively. (English article) The two men, Xiang Junbo and Guo Shuqing, were both chairmen of their respective banks until late last week, when they abruptly resigned just ahead of the announcement. So let’s think about this for a minute: chairmen of two of the country’s top 4 banks are now chairmen of two of the major financial regulators. In any other country, this kind of move would raise major concerns about conflicts of interest, as the big banks all deal in both insurance and securities through their various affiliates and vast webs of relationships in China’s financial world. Does this mean that if new insurance regulations are about to come out, then Agricultural Bank of China will know about them first and potentially use that information to its advantage? Or if the country decides to reform its securities policies, does that mean that China Construction Bank will be forced to more strongly enforce the new regulations than other banks because its former chairman now heads the securities regulator? The answer to all these questions is “probably yes”, and shows why the big banks are nothing more than policy tools that the government uses to train future top party and industry officials. This kind of shuffle isn’t unique to the banking industry, as the oil industry saw a similar move earlier this year (previous post) and the telecoms sector did something similar a few years back. But it does underscore why investors should be wary of these big state-run giants, and why China should seriously consider re-privatizing its big 4 banks.
Bottom line: The latest shuffle at the top of China’s big 4 banks underscores once again that these lenders are nothing more than policy instruments of Beijing and not true commercial lenders.
Related postings 相关文章:
◙ Message to Beijing: Privatize the Big 4 Banks 对中国政府说：将四大银行退市吧
◙ ICBC Discovers China’s Latest Low-Cost Export: Currency 工行将从非洲人民币结算业务中获益
◙ China’s Oil Shuffle: Not So Fast, Naysayers 石油巨头高管轮换：先别急着唱衰
