Analysts and investors have long criticized China's publicly listed banks for acting more like an arm of the government than a business beholden to commercial shareholders.
Now, the head of one of the country's top state-controlled banks is calling for changes that many say are needed to help Chinese banks ride out the economic downturn.
The vast majority of publicly traded Chinese banks are controlled by the state, with investors such as foreign banks and other corporations owning a small percentage of their shares. But 'the mixed ownership structure is more in name than in reality,' said Niu Ximing, chairman of Bank of Communications, the fifth-largest state-owned Chinese bank by assets and of which HSBC owns 19%.
Boards at Chinese banks, Mr. Niu said at an economic forum in Shanghai on Tuesday, often play an inadequate role in banks' decision-making process. In other words, it's often the government that decides when and how banks make loans.
Chinese banks, for example, have ramped up lending to local governments, property developers and industries already burdened by overcapacity over the past few years as Beijing called for more credit to support the economy. That rapid buildup of debt is now emerging as a key risk for the world's second-largest economy, many analysts have said, threatening to drag it down even further.
Mr. Niu predicted that profit growth at Chinese banks would slow to roughly the same rate at which China's GDP would be growing in the next five years. For this year, the government predicts that figure to be about 7.5%. Until recently, China's big banks had seen profits expanding at an annual rate of more than 20%.
'We must explore ways for the market to play a decisive role' in how Chinese banks allocate capital and resources, Mr. Niu said. One way to do that is to tie bank employees' salaries to their performance, he said.
State-controlled nature aside, he added, a certain degree of autonomy is needed for Chinese banks.
公开上市的中资银行绝大多数股权都掌控在政府手中，外资银行和其他企业投资者只持有这些银行少部分股权。不过，交通银行股份有限公司(Bank of Communications Co. ,601328.SH, 简称：交通银行)董事长牛锡明表示，商业银行在股权结构上已有混合所有制之名，但尚未达到混合所有制之实。按资产规模排名，交通银行是中国第五大国有控股银行，汇丰控股有限公司(HSBC Holdings PLC, HBC, 简称：汇丰控股)持有交通银行19%的股份。