Strategic Research On The Existence And Development Of Chinese Urban Commercial Bank

Urban Commercial Banks (CB? are one of the outcomes of China financial system reform. They are urban commercial banks, which are restructured from former Urban Credit Co-operative. Problems exist since the date of their establishment, among which, deficient business functions, low quality assets, heavy historical burden and loose internal control mechanism are the notable ones. These issues are driving most UCBs struggling for survival. To begin with the historical background of their founding, this Essay analyses current status and existing issues, concludes that is the combined effects of internal and outside influence, that is, internal management and external environment which make the UCBs the risk-concentrated group in China~ s financial industry. The solutions for their existence and development include right market segmentation for their business, focusing on mall-medium enterprises and urban residents?and developing into ocalized banks?and anks for urban residents? Mutual efforts from local government, the People Bank of China and Urban Commercial Banks are deemed necessary if these banks are to walk out of their current embarrassing situation. Improved internal control, favorable policy, merger and acquisition (M&A), are essential for UCBs to mitigate risks. While in the long run, the establishment of deposit insurance system in the near future is essential to guarantee the healthy development of small-and-medium-sized banks in China.