Shanghai Speeds up Reform of State-owned Financial Institutions

飞雪寒冰

The Shanghai government on Aug. 13 issued a new guideline on reforming state-owned financial institutions, signaling the acceleration of the reform of that sector.  

The guideline stipulates the goal, principle and implementation of the reform, according to the document issued by the Finance Office of the municipal government.

As of the end of 2008, the assets of state-owned financial institutions controlled by the municipal government, including banks and securities firms, totaled 2.45 trillion yuan.

Shanghai aims to attract giant foreign and national financial institutions into Shanghai and strengthen city-owned financial institutions, according to the guideline.

飞雪寒冰

Furthermore, the city also decided to reform the human resources systems, capital supplementing methods and incentive mechanisms in financial institutions, so as to make those institutions richer in capital, stricter in internal auditing, more innovative, and better in customer service and profit accumulation.

The old system in which the Communist Party appointed senior executives to financial institutions will be reformed, according to the document. Actually, some banks have already adopted this measure. In May, the board of the Pudong Development Bank appointed three deputy bank presidents, the first time for a city-owned financial institution to do so.   

Deputy presidents of financial institutions will be recruited independently by the board of directors in the future, Tu Guangshao, deputy mayor of Shanghai, told Caijing earlier this year.

飞雪寒冰

The third goal of the reform is to build an integrated state-owned assets management system and tighten the supervision of assets. The Finance Office will be entrusted by the Shanghai Branch of the State-owned Assets Supervision and Administration Commission to finance city-owned financial institutions.

The Finance Office will not directly interfere with the business decisions of financial institutions but instead will focus on influencing the organization of the board of directors.  

The Shanghai government will make efforts to fulfill the three goals within five years, according to the document.

So far Shanghai has 16 financial institutions with 35 licenses in financial business. City-owned financial institutions, including the Pudong Development Bank, Shanghai Bank and Shanghai International Group Corporation, will receive further support from the municipal government during their expansion.

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