Research On The Strategies Of Agricultural Bank Of China’s Business Investment Banking Transformation

With the deepening of interest rate marketization,commercial banks are in face with the constantly narrowing situation of net interest income because of the increasingly diversified and complicated financial business customers needs.To broaden the income source,commercial banks have implemented operational transformations.This mainly can be reflected in the corporate business which is about the transformation to the investment banking business.Compared with other commercial banks in developed countries such as Germany and the United States,foreign commercial banks have started early and possess rich theoretical and practical experience.Due to this,the development and transformation of their investment banking business strategies are of momentous current significance.In terms of the analysis of external factors,the pressure comes from the competition of foreign banks,the diversification of customer demand,and direct financing market leads to the transformation of commercial banks.From the angle of internal factors,commercial banks are able to realize the goal of broadening income source and enhancing market competitiveness through transformation.Considering the external and internal factors,the business transformation to investment banking is a general trend.However,the business transformation to investment banking should not simply focus on the proportion of non-interest income to net profit for the year.This should be embodied more in:(i)the ability of the comprehensive application of trust,asset management and other non-banking financial subsidiaries to provide customer-centric service;(ii)the ability to be the role of “media” to reduce customer financing costs through capital markets and direct financing markets;(iii)the ability to provide clients with high-efficient,comprehensive and refined financial services.The research purpose of this work is to provide referable suggestions of the business transformation to investment banking for the Agricultural Bank of China.Firstly,the case analysis method will be applied to the study of representative transformation of commercial banks in the United States and Germany.Secondly,this study is going to compare the Agricultural Bank of China with representative foreign commercial banks,domestic large state-owned banks,and domestic joint-stock listed banks.Thirdly,the previous research results will be summarized by the literature research method.Through the above research,the primary influencing factors of thebusiness transformation to investment banking for the Agricultural Bank of China are the changes in national financial policies,refined management and professional talent team allocation,risk control positioning,coordinated development of non-bank financial subsidiaries and employee education background.Based on these primary influencing factors,this study further analyses the advantages,disadvantages and problems in the progress of the investment banking transformation of the Agricultural Bank.Under the premise of the explicit advantages,disadvantages and the influencing factors,this paper continues to analysis the existing and potential competitors of the Agricultural Bank through the SWOT analysis.From the analysis,the main measures that should be involved in the investment banking transformation of the Agricultural Bank in the current competitive market environment are listed as follows: firstly,the company should transform the business philosophy positively;the second point is to establish and improve the talent training mechanism that meets the demand of the refined management;the third suggestion is to play full role of “media” in the direct financing market;the fourth view is about the establishment of the risk management concept that matches the development of the investment banking business;the last point is to simplify the internal control operational mechanism.