Lending rate move fails to spur banks into action
By Wang Yanlin |
July 22, 2013, Monday
|
Print Edition
Print Edition
MAJOR banks seem to be in no hurry to make capital out of China's "sudden" announcement on liberalizing bank lending rates last Friday, as evidenced by a lack of any moves.
Zuo Xiaolei, chief economist at China Galaxy Securities, said that although scrapping the controls was an important step toward interest rate marketization, China's big commercial banks are unlikely to recklessly lower their lending rates as they remain very competitive given their size.
After the People's Bank of China's announcement late on Friday, leading domestic lenders, including Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank, kept their lending rates intact, calling the policy decision "too sudden" to make any moves.
Besides, lower limits on lending rates have been removed but banks still have to follow the ceiling for deposit rates.
"This thus does not pose a really strong challenge to the status of big commercial banks," Zuo said.
Liu Ligang, chief economist at Australia and New Zealand Banking Group Ltd, said China's state-owned enterprises will benefit from the decision, as they will have greater bargaining power over banks.
Yin Zhongli, a researcher at the Chinese Academy of Social Sciences, believed small- and medium-sized firms will also gain in the longer term because this will give rise to competition among banks for clients.
Yin said the decision will not affect banking shares much.
Sun Lijian, an economics professor at Fudan University, suggested the move was a prelude to financial reforms, which will create both opportunities and challenges for banks.
The Shanghai stock index plunged 1.52 percent to close the week at 1,992.65 points on Friday.
The slump was largely due to a massive sell-off amid concerns over the property market rather than the central bank's announcement, which was made after trading was closed.
Zuo Xiaolei, chief economist at China Galaxy Securities, said that although scrapping the controls was an important step toward interest rate marketization, China's big commercial banks are unlikely to recklessly lower their lending rates as they remain very competitive given their size.
After the People's Bank of China's announcement late on Friday, leading domestic lenders, including Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank, kept their lending rates intact, calling the policy decision "too sudden" to make any moves.
Besides, lower limits on lending rates have been removed but banks still have to follow the ceiling for deposit rates.
"This thus does not pose a really strong challenge to the status of big commercial banks," Zuo said.
Liu Ligang, chief economist at Australia and New Zealand Banking Group Ltd, said China's state-owned enterprises will benefit from the decision, as they will have greater bargaining power over banks.
Yin Zhongli, a researcher at the Chinese Academy of Social Sciences, believed small- and medium-sized firms will also gain in the longer term because this will give rise to competition among banks for clients.
Yin said the decision will not affect banking shares much.
Sun Lijian, an economics professor at Fudan University, suggested the move was a prelude to financial reforms, which will create both opportunities and challenges for banks.
The Shanghai stock index plunged 1.52 percent to close the week at 1,992.65 points on Friday.
The slump was largely due to a massive sell-off amid concerns over the property market rather than the central bank's announcement, which was made after trading was closed.
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