State-owned Commercial Bank Ownership Structure Defects And Plan For Its Optimization

The shareholding reform of state-owned commercial banks started from January2004 is in full swing, the overall goal of this reform is: to transform state-ownedcommercial banks to be internationally competitive modern joint-stock in thetransition period accession to the WTO ,which is of adequate capital, strict internalcontrol, security operation, good services and performance, through reforming themanagement system, improving its governance structure, transforming operatingmechanism and advancing performance.Improving corporate governance has become the core of the reform of theshareholding reform in state-owned commercial banks. Ownership structure is thebasis of corporate governance, its legitimacy, to some extent, determines theeffectiveness of corporate governance. Ownership structure of State-ownedcommercial banks have been showed up after the joint-stock transformation, thisarticle is about whether the ownership structure is reasonable, what the impact tocorporate governance and how to optimize the ownership structure of state-ownedcommercial banks to further improve corporate governance.The first part is about ownership structure and corporate governance theory.Beginning with the fundamental concept, this article analyzes the relationship of theownership structure and corporate governance theoretically and empirically. Researchhas shown that, theoretically the ownership structure is the basis of corporategovernance;it can impact corporate governance mechanisms directly. Ownershipstructure has different effects to corporate governance mechanisms. Empiricalresearch through the ownership structure and indicators to measure companyperformance also shows that the ownership structure has a significant impact oncorporate governance.Part two compares two pattern of corporate governance with two typicalownership structures. Practice has proved that no optimal ownership structure,different ownership structure can yield good corporate governance results.Comparative study of two pattern of corporate governance found that differentownership structures need to work with different governance and the legal system inorder to attend good performance. Such research can provide some inspiration andlessons for the optimizing the ownership structure of the state-owned commercialbanks.The third part analyzes the ownership structure of transformed state-ownedcommercial banks. The analysis shows that there are some defects in the ownershipstructure of the state-owned commercial banks: First, the agency problem of thestate-owned shares has not been fundamentally resolved, the owner of state-ownedshares is still absent. Second, the state-owned shares are highly concentrated anddominant. The facts of corporate governance in the state-owned enterprises withsimilar ownership structure shows that the ownership structure of state-ownedcommercial banks will lead to many problems which is not conducive to theimprovement of corporate governance. According to the first part of the research andthe state-owned commercial banks specificity, the ownership structure of thestate-owned commercial banks have adverse effects in corporate governancemechanisms, financial supervision and depositor interests protection.Part IV provides some suggestions and responses in optimizing the ownershipstructure of the state-owned commercial banks refer to its defects. Study in Part twoshowed that different ownership structure needs different governance mechanism andlegal system in order to attend good performance. The situation in our country hasdecided that highly dispersed ownership structure is not the best choice ofstate-owned commercial banks. Therefore keeping state-owned share relativedominant is the best choice of state-owned commercial banks' ownership structuraloptimization. Finally, the article proposed a number of policy suggestions to realizethe optimization of state-owned commercial banks' ownership structure.