Quickening The Reform Of Our State-owned Commercial Banks Temporarily And Permanently

As the principal part of our financial system, the state-owned commercial banks have been absolutely in monopoly the position, which has played the main role in attracting the social saving, transforming the saving to the investment, and improving the high growth of the national economy. In recent 20 years, there have been a series of reforms being put on our state-owned commercial banks, and have achieved remarkable success. However, many profound problems, such as property right institution, governance structure and relative organization arrangement of the state-owned commercial banks, have not been moved, or moved from the root, resulting in low-efficient allocation of a great deal of money with the traditional pattern, continuously worsened asset quality, lower management performance and accumulated managing risks. The status quo of our state-owned commercial banks is not in tune with the high growth of our economy, and can't be in harmony with international practice. The foreign banks and native banks will enjoy the national treatment when Dec. 2006, when the intense competition among foreign and native banks will be in full swing. Facing the pressure of competition and challenge, the state-owned commercial banks must expand the reform steps to be invincible.The reforms of the state-owned commercial banks have been settled finally, and the reforming objectives have been set. How to deepen the reform effectively and realize the certain objectives are the important items on the agenda. This essay discusses the temporary and permanent reform of the state-owned commercial banks On the basis of comparing the relative data of the foreign and native banks, the essay points out the gap. Either in asset quality, capital, ability to earn money, or in the income structure, and human resources allocation, we have great gap from foreign banks. In view of the open-up 3 years later and the gap, deepening the reform of state-owned commercial banks is inevitable.The great amount of non-performing loans has set big barriers in the way of our state-owned commercial banks' reform. How to solve the non-performing loan quickly and effectively has been the most pressing matter of the moment. Finding out the reasons bringing about the non-performing loans is the premise to solve them. In my opinion, the main reasons are due to the institution: first is the property right institution. There is not a clarified property right institution in our state-owned commercial banks, and lacking property right subject is the basic reason causing a lot of non-performing loans; second is that we have not perfect financial legal system; third is that the social credit system is not perfect, resulting in the enterprises' dodging the liabilities on purpose. Just because of the imperfect institutions above-mentioned, a lot of non-performing loans have been generated, which I call "institutional-non-performing loans" in this essay.Solving the non-performing loan quickly and effectively has been the most pressing matter of the moment. Facing so many difficulties in solving the non-performing loans, such as limited time, high cost and lacking effective pricing and evaluating system and the ways to deal with the non-performing loans, we should use the experiences abroad for references. First, we should handle the non-performing loans in time avoiding its accumulation that becomes the heavy burdens of the banks. Second, seeking the necessary legal protection. For instance, the banks in U.S. always take this measure when dealing with the loan crisis to reduce the government's intervention to the greatest extent and avoid the market distortion. Third, seeking the government support. In the operation of REC, the American government had used 150 billions dollars and drawn 90 billions dollars as the reserves. Anyway, they were the final supporter of the banks when they handle the non-performing loans. Fourth, perfecting the intermediaries. Although the non-performing loans belong to the government, the intermediaries a...