A Study On The Legal Problems In China’s City Commercial Banks

Being established against the special and unique historical background of China,the city commercial banks are the results of a series of purposes and attempts from thefinancial bureaus in the Chinese government, such as rectifying the city creditcooperatives and decreasing the financial risks of the city. Nowadays, the citycommercial banks,which orignated from the city credit cooperatives in the1980s andaimed at faciliating the small and medium-sized enterprises and promoting thedevelopment of local economy, have become an indespensable part of the Chinesefinancial system of banks. According to the statistics, in China there are139citycommercial banks in total up to September,2011, the number of which has farsurpassed the number of the state-owned commercial banks and the nationaljoint-stock commercial banks.With China entering the WTO, the trend of global integration is graduallyformed. With the influx of foreign banks and the rapid development of the joint-stockcommercial banks, the city commercial banks are forced to undertake somesystematic reforms. In recent years, recombination, merger, listing and establishingbranches inter-regionally all contribute to the explosion of the city commercial banks,and some of them register a new high in its profits every year. However, a greatvariety of legal problems and financial risks follow the rapid development, includingthe unreasonable governance structure in the modern enterprises, the incompletesystem of risk control, the legal problems in the inter-regional operation and the risksin the financing through the local government.In this paper, I would like to make a legal study on the problems in the reformand development of the city commercial banks, while most of the other current studieswould like to find their ways in the field of economy. I would focus on the legal risksand the corresponding precautions, covering the corporate governance structure, thesystem of risk control, the legal problems in the inter-regional operation, the risks inthe financing through the local government, and the merge, the recombination and thealliance in the development of city commercial banks.