2006 – Year of the Corporate Treasurer?
Wide-ranging reforms to the structure, financing and regulation of China’s banking sector in 2006 look set to have an enormous impact on corporate treasurers this year.
Many of China’s State-owned banks are in the process of restructuring. The reform of China’s State-owned enterprises began in earnest in 2005 and the banks are now set to follow suit. Ownership of many of the large domestic banks will move into the private sector as the sale of stakes previously held by the State begins. These sales will be accompanied by radical programmes of reform: banks will reduce their nonperforming loan burdens and implement improved risk management regimes. The Chinese government has indicated that the practice of State-funded bailouts for badly performing banks will also draw to a close.
An intensive programme of industry deregulation within the banking sector is expected in 2006. The advent of a less restrictive banking system will open up many opportunities for the corporate treasurer operating in China. Banks will be able to offer their corporate clients an increased range of products and services. The new Bulk Electronic Payment System (BEPS) is expected to be rolled out across China in 2006 using the existing infrastructure of CNAPS (China National Advanced Payment System). The new system will radically improve the standard and speed of lower value electronic payments.