China Post's Postal Savings Unit To Spin Off
China's State Council has ordered China Post (the Chinese
postal service), to spin off its postal savings unit into
an independent banking unit. This will make it the fifth
largest bank in the country, after the country's four
majors, with deposits of 840 billion yuan (US$101 billion).The
new bank will only perform interbank lending, and will
not provide retail lending services.
China Post provides basic deposit services for retail
customers, and is especially popular in Chinese rural
areas, where banking choices and services are very limited.
It has 20,000 branches throughout China.
China Post is largely unprofitable, and has opposed earlier
moves to spin off the postal savings unit. Since it is
entirely state-owned, it has largely depended on government-subsidized
loans to operate.
The order from the State Council to spin off the postal
savings unit shows that the government has now focused
its attention on getting better use and efficiency out
of state-owned assets, without incurring extra costs and
liability. In the past few months, it has paid significant
moves to make two state-owned banks, Bank of China and
China Construction Bank, meet international capitalization
requirements, so that they can compete with foreign banks
when they enter the Chinese market in 2006.
While the use of post offices to perform basic banking
services is comparatively rare in North America, it is
much more common in Asia. Japan, Taiwan and South Korea
all have very significant amounts of savings which are
held in their postal savings business units.
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