Analysis On Current Issue Of Introducing Foreign Strategic Investor By State-own Commercial Bank

The state-owned commercial bank is the key factor in promoting economic development, supporting economic reforms and safeguarding economic stability. The purpose of promoting shareholding reform and the listing of the state-owned commercial bank is to revolutionize ownership and operating systems of the traditional bank. Only through this can a strong management system be built up to strengthen market restrictions on the bank and raise competitiveness of national banks in the national and international financial markets, and be prepared for the competition with foreign investors at the end of the transition period at the close of 2006. Under this backdrop, the paper discusses the introduction of foreign strategic investors in the reformation of state-owned commercial banks. It analyses in detail the root problems and current situation of state-owned commercial bank reforms, the significance of foreign strategic investors and issues that should be addressed.With external help from experienced, professional foreign strategic investors, state-owned commercial banks can not only raise capital and improve shareholder makeup, it also absorbs quality management skills and experience, as well as advanced technology and products, strengthening competitiveness in the financial market and building market image in the international scene. This is beneficial not only in overseas development and financing, but more importantly, in setting up a good management system in commercial banks. The lack of effective company management is the root problem of a backward management system, accumulating risks, weakening regulating mechanism, low productivity and efficiency, and is precisely the reason for reforming the state-owned commercial bank. If the reform is successful, it will be, on top of a milestone in China's banking industry, a crucial strategic development in China's economic and financial development.At the moment, introducing foreign strategic investors is an effective route to reforming commercial banks, and a prerequisite in implementing financial reforms and opening up the financial market. At the same time, we must look out for problems that may arise, or might be already budding, in the process of introducingforeign capital. So long as we observe the regulations and instructions as set by the CRBC on introducing foreign strategic investors and stay alert of possible problems, we would be able to take advantage of the foreign capital, professional knowledge, international experience, and advanced technology in the best interests of the country. And in this direction, China's banking industry would expand and develop, reforming into a strong competitive force with modern financial services of professional standards.