Research On The Operating Pattern Of Chinese Large Commercial Banks

Since 1990s, financial innovation and loosening regulation have become the global trend. The Financial Services Modernization ACT 1999 in USA, which allowed full authority for banks to enter investment banking and insurance, announced no ban to financial holding company, caused the great changes on the operational models of the entire international banking industry. From then on universal operation has become the mainstream operational models. In order to develop universal operation and enhance the competitive capability, bank mergers, acquisition and reorganization become grow in intensity. Through those activities the collectivization tendency of banking industry has become increasingly dominant.As far as the development is concerned, China financial industry would move towards universal operation and supervision. However, the principle of separate operation would not be changed, nor the supervision, at least at present. The main reasons lie in the restrict of current regulation policies, the limited supervision capability, the lag of financial laws and rules, as well as the flaws in banks' internal control.With the ending of past-transitional of china's accession to WTO and the economic globalization, it is necessary for China to cultivate home financial institutions which could compete with the international financial groups. But considering the lack of some necessary condition for universal operations in china, such as the developed capital market and the universal supervision capability, it is still not realistic to set up Germany -like versatile bank in the short-term. So the construction of financial holding company would be a precisely realistic choice. Some policies should be applied to support existing financial holding companies, Besides that, some large commercial banks with competitive advantage in assets, management and risk control could be chosen to be transformed into new financial holding companies, through acquiring or establishing securities and insurance companies, investing in non-bank financial enterprises. As a result, some strong financial holding companies could be set up and then make adequate preparations for future competition with the international financial holding company after WTO accession.Based on the above viewpoint, I take industry and commercial bank of china, Agricultural Bank of China, Bank of China and China Construction bank as the object of study. The research has applied theories of economic, finance and management, and adopted accounting, econometrics and statistics method logy. Considering the reality of our country's banking industry, this thesis conducts the thorough research to the operation pattern and related problems about financial holding companies of the five large commercial banks.Firstly, the thesis starts from the collectivization development of international banking industry. On the basis of elaborating on the intrinsic cause, the statement is put forward that financial holding company could be the optimal model for collectivization development of global banking industry. The paper make the comparison analysis to ?pattern of financial holding company's management and operation in the Western Developed countries, and takes the Citibank as the case study.Secondly, through the analysis of main operational characteristics of Chinese large commercial banks, this paper demonstrates that there are many internal and external limitations for Chinese large commercial banks to develop universal operation at present. It is a realistic choice for Chinese large commercial banks to setting up financial holding company for developing universal operation. In addition, this section elaborates on setting up patterns, operational models and organization structure of the financial holding company.Finally, according to the main problems, risks and possible interests conflicts faced by the financial holding company under new economic situation, following the Core Principles for Effective Banking Supervision of Basel Committee, this section analyze the necessity of strengthening supervision for financial holding company. Through careful study of international supervision for financial holding company, this paper puts forward the rearrangement model of financial supervision system in China.