Beijing approves new postal savings bank

Beijing: China has formally approved the establishment of a new postal savings bank, setting the stage for the transformation of China Post's vast network of savings accounts into an independent financial institution.

The China Banking Regulatory Commission (CBRC) said the new bank would be wholly owned by the China Post Group, an entity recently carved out of the State Post Bureau to carry out its business functions.

The new bank would concentrate on retail banking and intermediary services, serving both urban and rural residents but with particular emphasis on the latter.

To that end, the bank would set up a department specifically for rural financial services, the CBRC said, adding that the bank would work with policy banks and rural credit cooperatives to improve the coverage and quality of rural finance.

The postal savings bank would have a "mutually complementary" relationship with other commercial banks, the agency said. It would be held to the same standards of internal controls and risk management as other banks, it added.

"The ultimate goal is to build the bank into a competitive and safe modern bank with adequate capital and strong internal controls," the watchdog said.

The CBRC did not disclose any financial details on the new bank, but state media reported earlier that the postal system had deposits worth 1.5 trillion yuan ($192 billion) at the end of June 2006, which would make it the country's fifth-largest lender by deposits.

China Post had already begun to expand the services offered through its 36,000 post offices in preparation for the bank's creation, setting up a pilot programme for small-scale loans in several provinces last year. Previously, it did not offer loans.