China?s private capital has entered every financial field, like banking, securities, insurance, funds, trust, finance and financial lease, etc, according to an investigation released in the latest issue of New Wealth magazine.
Currently, eight Chinese family firms hold total investment of 8 billion yuan (US$966 million) in financial institutions. Although most private holding financial institutions are at the bottom of family companies, they are still tightly controlled by the parent body or related companies. They have some similarities with other family firms in Asia.
Banking
Private capital controls 14.6 percent of commercial banks? assets. Except for the four state-owned banks ? Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China, the private assets in top 10 national joint-stock banks have totaled 162.8 billion yuan (US$19.7 billion), 6.82 percent of these banks? total assets.
The listed Shenzhen Development Bank, Minsheng Bank, Shanghai Pudong Development Bank and Merchants Bank have certain stakes held by public shareholders. Thus, the total assets owned by private persons have risen to 348.6 billion yuan (US$42.1 billion), 14.6 percent of all joint-stock banks.
Besides, China has over 100 city commercial banks and thousands of credit cooperatives. The private stakes in these banks are no less than that in joint-stock banks.
Insurance
Ping?an, Xinhua Life and Hua?an Insurance Co, in which there are large private shareholdings, had achieved insurance premium of 49.4 billion yuan (US$6 billion) in 2001, 23.4 percent of total national premiums.
Considering these private stakes, the premium revenue shared by private capital is 15.53 billion yuan (US$1.8 billion), 7.4 percent of total. The revenue doesn?t include that from the recently established Minsheng Life Insurance Co and Oriental Life Insurance Co.; otherwise the market share would be much higher.
Securities
Statistics show private holdings in securities companies have reached 6.5 billion yuan (US$785 million). Considering other small stakes, the total capital has exceeded 7 billion yuan (US$846 million), accounting for 13 percent of total registered capital of 104.3 billion yuan (US$12.6 billion).
Currently, it is quite popular for private enterprises to buy stocks in security companies. In Haitong Securities Co., which has the largest registered capital, there is 2 billion yuan (US$241 million) of private capital, over 23 percent of its total registered capital of 8.73 billion yuan (US$1 billion).
Others
After several years? restructuring, only over 40 trust companies are still in business. Among them, there are three private holding trust companies and one awaiting approval.
Financial leasing is the most privatized one in all the financial fields. Private companies control half of the12 financial leasing companies.
Of over 70 finance companies in China, only two are privately owned. With high thresholds set for non-banking financial fields, private enterprises seldom have the opportunity to enter.
Return
Most private holding financial institutions have limited profits, for they still need bigger input. However, some of them have begun to receive good returns.
In 2001, 16 private holding financial institutions suffered no losses. Ping? an Insurer, for instance, reported net profit of 1.76 billion yuan (US$212 million)
Of course, some securities companies, influenced by the gloomy stock market, suffered huge losses.
Ways of Holding
There are three main ways for private capital to hold a stake in financial institutions.
The dominant way is to establish or co-establish new financial institutions, like Minsheng Bank, Taizhou City Commercial Bank, Xinhua Life Insurance Co.; second, acquire stakes when state shareholders leave; last, buy more stocks.
(china.org.cn by Tang Fuchun January 20, 2003)
