Merging city banks can allow them to boost product innovations, tighten risk controls and explore business in bigger geographic regions.
But considering China mainland’s scandal-riddled brokerage sector, any concrete move may not come early this year before risk-management rules are finalized while only select brokerages are likely to be included at the initial stage.
The declines were largely due to lack of confidence. Worries over weak corporate governance, brokers’ scandals and an equity oversupply weighed on the bourses.
Stiffer competition from bigger state-owned banks may have contributed to the earnings drop. Besides, costs probably rose as the bank was on track to expand out of the city.
By disposing of bad debt and restructuring itself into a joint-stock venture, ICBC posted handsome profits, which may help attract investors in its new share sale.
The rules will not only protect investors’ funds but also help regulators better streamline brokerages’ businesses.
The move is clearly aimed at protecting small investors. If directors fail to convene a shareholders’ meeting when necessary, investors can act on their interests and help make corporate issues transparent.
Competition is set to intensify. For investors, it’s encouraging to see more products, which mean more channels for diversifying investments. But regulators must work out rules to prevent risks.
Domestic banks have experience and expertise in managing investment in low-risk bonds based on their long-history in asset-management businesses. It’s good for ICBC to pursue the plan.
Big parent companies are likely to merge or sell some of their weaker listed arms to cut costs to make sure they can stay alive. Besides, additional assets may be infused in good-quality public firms...
It’s another stimulus the government wants to adopt to invigorate the market by bolstering trading in the long term.
It gives brokers a new revenue channel. The program may be expanded to more securities firms but the pace will be slow as authorities want to contain risks.
The bonds were forecast to jump as their government backing means little risk to investors. As the country’s stock markets still face policy uncertainties, these bonds provide a haven for investors.
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