GBO is a leading corporate services firm that provides a range of solutions to businesses around the world.

 

GBO is committed to helping organizations achieve their strategic objectives and stay ahead of the competition by providing reliable research and insights on various industries and markets. As part of its efforts to support businesses, GBO has conducted extensive research on various topics, including the Chinese banking sector and banking fraud. In this report, we will be discussing the findings of GBO’s research on the Chinese banking sector and the challenges and opportunities it presents for businesses operating in China.

Probably the greatest change seen in the world of banking and finance in the 21st century has been the emergence of Chinese banking as one of the major forces in all aspects of global economies.

 

Before 1978, China had a mono-bank model, in which all banks were part of one administrative government-owned hierarchy. Slowly governmental loans were replaced by bank loans, which were more profit oriented. The Government-owned People’s Bank of China was broken up into four specialized state-owned banks, also known as the “Big Four”.

These banks were the Bank of China (BOC), the Industrial and Commercial Bank of China (ICBC), the China Construction Bank and the Agricultural Bank of China (ABC). These four banks now occupy the first four ranks in the table of world banks rated by total assets.

Altogether, Chinese banks make up 19% of the total number of banks in the top one hundred rated by total assets, and the country ranks #2, just after the USA, in terms of the total market capitalization of the listed banks. Between them, the US and Chinese banks account for 25 of the top 70 listed banks, with USA having 13 and China having12. Together the two countries account for 54% of the world’s total market in banking share values.

List of Largest Chinese Banks in the world. add table

The biggest bank in China ranked by assets is Industrial and Commercial Bank of China, which is also the largest bank in the world in assets. However, when banks are rated by revenue, the biggest bank in China is Agricultural Bank of China, which ranks #2 in the world, after Bank of America.

Moving out of the previous centrally controlled banking mode, China now has 3 tiers of domestic banks. The first tier consists of the “Big Four” state-owned banks. The second tier consists of national-level domestic joint-equity banks and the third tier consists of approximately 100 city-level commercial banks. Besides the policy banks, Chinese-foreign joint-equity banks, banks fully capitalized by foreign funds are active on the Chinese market.

The reformation of the banking sector and the opening to the world economy steered China into enormous economic growth. The agricultural sector learned from foreign countries and became more efficient, foreign trade exploded, and foreign technologies were implemented rapidly with the support of foreign investments. From 1976 to 2020 China’s total GDP increased from $793.568 billion to $14.34 trillion. The GDP per capita grew from $853 to $8130 in 2020. China developed far faster than worldwide GDP.

Commercial banks in China only started to develop when the central governments changed the policy of tight control at the beginning of the 1990s. After 30 years without commercial banking China started to use foreign expertise (China imported textbooks, established business schools and trained their staff by foreign experts) to build the commercial banking sector in China.

 

With the establishment of the Bank of China in 1912, the modern Chinese banking system can be traced back to the late 19th century. In the 1950s and 1960s, however, the government nationalized all financial institutions and established the People’s Bank of China (PBOC) as the central bank, causing significant changes in the banking sector. China began implementing economic reforms in the late 1970s, and the banking sector underwent a significant transformation in the 1990s with the introduction of new financial products and the entry of foreign banks.

 

As of June 2021, the total assets of the Chinese banking sector were 337.7 trillion yuan (approximately $52.2 trillion), according to data from the People’s Bank of China. About half of the sector’s assets are held by four large state-owned banks: Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Agricultural Bank of China (ABC), and Bank of China (BOC). In the first half of 2021, total assets will increase by 10.5%, continuing the sector’s rapid growth over the past few years.

The China Banking and Insurance Regulatory Commission (CBIRC) regulates the Chinese banking sector by overseeing the licensing and supervision of banks as well as the risk management of the banking system. In recent years, the CBIRC has taken measures to strengthen regulation, including imposing stricter capital requirements and cracking down on illegal fundraising activities.

As of 2021, China was home to more than 4,000 banks, including large state-owned banks, joint-stock commercial banks, city commercial banks, rural commercial banks, and foreign banks. The four state-owned banks mentioned earlier are the largest banks, accounting for approximately 40% of the sector’s assets.

 

Total Credit: According to PBOC data, the total credit extended by Chinese banks in June 2021 was 184.1 trillion yuan (approximately $28.3 trillion). This credit consists primarily of loans to businesses and individuals, with the remainder consisting of bonds and other debt instruments.

 

Overall, the Chinese banking sector is deemed to be relatively strong, with large state-owned banks holding a dominant market position. However, there are concerns regarding the high levels of debt held by Chinese companies and local governments, which could pose a future threat to the banking sector. The government has taken steps to mitigate these risks, including tightening shadow banking regulations and cracking down on illegal fund-raising activities. Additionally, fintech companies and online lenders offering new products and services to consumers and businesses are increasing competition in the sector.

 

Biggest commercial banks in China

There are many commercial banks in China, which are financial institutions that provide a wide range of banking and financial services to individuals, small businesses, and corporate customers. Some of the largest and most well-known commercial banks in China include:

  1. Industrial and Commercial Bank of China (ICBC): The largest bank in China by assets, and one of the largest banks in the world.
  2. China Construction Bank: The second-largest bank in China by assets.
  3. Agricultural Bank of China: The third-largest bank in China by assets.
  4. Bank of China: The fourth-largest bank in China by assets, and one of the oldest banks in the country.
  5. China Development Bank: A state-owned development finance institution that provides financial services to support economic and social development in China.
  6. China CITIC Bank: A large commercial bank in China, with a strong focus on retail banking.
  7. China Minsheng Banking Corporation: A mid-sized commercial bank in China, with a focus on serving small and medium-sized enterprises.
  8. China Guangfa Bank: A large commercial bank in China, with a strong presence in the retail banking sector.
  9. Ping An Bank: A large commercial bank in China that is known for its strong digital banking capabilities.
  10. China Pacific Insurance: A financial services company in China that offers a range of insurance products as well as banking and investment services.

 

Chinese banking sector explained

Between 2020 and 2012, the Chinese banking industry had substantial growth, partly as a result of expanding digital technology usage, the extension of banking services into rural regions, and regulatory actions meant to handle rising debt levels. The insurance industry continued to expand during this time, and lending activity remained healthy, which helped the sector as a whole prosper.

The China Banking and Insurance Regulatory Commission said that Chinese banks’ total assets hit $40 trillion in 2020, growing at a YoY pace of 7.3%. The ratio of non-performing loans (NPLs) stayed constant at about 1.9%. Online banking activity also increased dramatically as a result of the development of digital technology, with mobile banking transactions expected to exceed $40 trillion in 2020, an increase of 30% YoY.

Despite the sector’s expansion, there were certain difficulties and dangers. As an illustration, growing debt levels, especially in the corporate sector, remained a concern. Additionally, fintech firms’ growing rivalry for the banking market put established banking structures and revenue sources in danger.

 

The continued extension of banking services into rural regions and the rising acceptance of digital technology are projected to fuel further growth in the Chinese banking industry in the future. The regulatory environment, which includes policies targeted at lowering financial risks and fostering sector stability, is also anticipated to continue favorable.

 

Despite the sector’s expansion, there were certain difficulties and dangers. As an illustration, growing debt levels, especially in the corporate sector, remained a concern. Additionally, fintech firms’ growing rivalry for the banking market put established banking structures and revenue sources in danger.

 

The continued extension of banking services into rural regions and the rising acceptance of digital technology are projected to fuel further growth in the Chinese banking industry in the future. The regulatory environment, which includes policies targeted at lowering financial risks and fostering sector stability, is also anticipated to continue favorable.

 

Banking in China
The banking sector in China is a vital part of the country’s economy, with many banks operating in the country. Chinese banks offer a wide range of financial products and services to individuals, small businesses, and corporate customers, including checking and savings accounts, loans, mortgages, credit cards, and investment products.

 

The banking sector in China is regulated by the China Banking and Insurance Regulatory Commission (CBIRC), which is responsible for maintaining financial stability, supervising and regulating banks and other financial institutions, and implementing monetary and credit policies.

 

There are many challenges facing the banking sector in China, including a slowing economy, rising levels of debt, and increasing competition from non-bank financial institutions. However, the sector is also seeing opportunities for growth and innovation, particularly in areas such as digital banking and financial inclusion.

 

The banking sector in China is an important part of the country’s financial system and plays a significant role in the country’s economic development. As of 2021, the banking sector in China is made up of four major types of banks: commercial banks, policy banks, development banks, and foreign banks.

 

Commercial banks in China include state-owned banks, joint-stock commercial banks, city commercial banks, and rural commercial banks. These banks provide a range of financial services, including deposit-taking, lending, foreign exchange, and other financial services to businesses and individuals.

 

Policy banks in China are state-owned development finance institutions that provide financing for infrastructure and development projects. These banks include the China Development Bank and the Export-Import Bank of China.

 

Development banks in China are financial institutions that provide financing for infrastructure and development projects. These banks include the Agricultural Development Bank of China and the China Exim Bank.

 

Foreign banks in China are banks that are headquartered outside of China but operate branches or subsidiaries within the country. These banks provide a range of financial services to businesses and individuals in China.

 

Overall, the banking sector in China plays an important role in supporting economic growth and development in the country.

 

China’s banking sector, which includes commercial banks, investment banks, insurance firms, and other financial institutions, is referred to as banking in China. The Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China, and the Agricultural Bank of China are the four state-owned commercial banks that dominate the country’s banking sector. According to total assets, these four banks are among the biggest in the world.

 

China also has a number of smaller commercial banks, as well as foreign banks that conduct business there, in addition to these state-owned institutions. The People’s Bank of China, China’s central bank, which is in charge of establishing monetary policy, oversees the country’s banking industry.
while also overseeing the banking system.

 

The Chinese government has put in place a number of initiatives to modernize and enhance the sector, and the country’s banking industry has seen significant development and reform in recent decades.

10 safest banks in the China by revenues and assets:

  1. Industrial and Commercial Bank of China (ICBC) – As of June 2021, ICBC had total assets of over 34.7 trillion yuan (approximately US$5.3 trillion).
  2. China Construction Bank (CCB) – CCB had total assets of over 34.1 trillion yuan (approximately US$5.2 trillion) as of June 2021.
  3. Agricultural Bank of China (ABC) – As of June 2021, ABC had total assets of over 28.8 trillion yuan (approximately US$4.4 trillion).
  4. Bank of China (BOC) – BOC had total assets of over 24.8 trillion yuan (approximately US$3.8 trillion) as of June 2021.
  5. Postal Savings Bank of China (PSBC) – As of June 2021, PSBC had total assets of over 12.8 trillion yuan (approximately US$2.0 trillion).
  6. China Merchants Bank (CMB) – As of June 2021, CMB had total assets of over 9.1 trillion yuan (approximately US$1.4 trillion).
  7. Shanghai Pudong Development Bank (SPDB) – SPDB had total assets of over 7.2 trillion yuan (approximately US$1.1 trillion) as of June 2021.
  8. China CITIC Bank – As of June 2021, CITIC Bank had total assets of over 7.1 trillion yuan (approximately US$1.1 trillion).
  9. China Minsheng Bank – As of June 2021, Minsheng Bank had total assets of over 6.4 trillion yuan (approximately US$1.0 trillion).
  10. China Everbright Bank – As of June 2021, Everbright Bank had total assets of over 5.6 trillion yuan (approximately US$0.9 trillion).

10 richest banks in China by revenues and assets

Rank Bank Name Description Total Assets (in billions USD)
1 Industrial and Commercial Bank of China (ICBC) ICBC is a state-owned bank and the largest bank in China by both total assets and revenue. It provides a range of financial products and services to individuals, corporations, and government agencies. $5,214.97
2 China Construction Bank (CCB) CCB is another state-owned bank and the second largest bank in China by total assets. It provides a variety of financial services, including corporate banking, personal banking, and investment banking. $4,348.57
3 Agricultural Bank of China (ABC) ABC is a state-owned bank that specializes in providing financial services to the agricultural sector and rural areas. It also offers a range of other financial products and services to individuals and corporations. $3,930.44
4 Bank of China (BOC) BOC is one of the four largest state-owned commercial banks in China. It provides a range of financial services to individuals and corporations, including deposit-taking, loan-making, and foreign exchange services. $3,497.23
5 China Merchants Bank (CMB) CMB is a joint-stock commercial bank that focuses on providing financial services to small and medium-sized enterprises. It also provides services to individuals and corporations in other sectors. $1,319.11
6 China CITIC Bank (CITIC) CITIC is another joint-stock commercial bank that provides a range of financial services to individuals and corporations. It also offers investment banking and asset management services. $1,148.19
7 Bank of Communications (BOCOM) BOCOM is a state-owned commercial bank that offers a range of financial products and services, including corporate banking, personal banking, and investment banking. It also has operations in Hong Kong and Macau. $1,105.61
8 Ping An Bank (PAB) PAB is a subsidiary of Ping An Insurance, one of China’s largest insurance companies. It provides a range of financial services to individuals and corporations, including deposit-taking, loan-making, and investment services. $726.70
9 China Guangfa Bank (CGB) CGB is a joint-stock commercial bank that focuses on providing financial services to individuals and small and medium-sized enterprises. It also provides investment banking and asset management services. $699.62
10 Shanghai Pudong Development Bank (SPDB) SPDB is a joint-stock commercial bank that provides a range of financial products and services to individuals and corporations. It has operations in China and overseas, including in Hong Kong, Singapore, and London. $677.61

Chinese banking fraud has been a significant issue for the nation’s financial industry.

Here is a brief summary of the Chinese banking sector’s history, statistics, regulation, number of banks, and total credit:

In recent years, a number of high-profile cases of banking fraud have been reported in China, which has a long history of such fraud. The Bank of China’s $1.3 billion loan fraud scandal in 2016, in which several executives were arrested for approving fraudulent loans, was one of the most significant cases. The China Banking and Insurance Regulatory Commission (CBIRC) reported in 2020 that it had discovered 3,181 instances of banking violations with a total value of 10,4 billion yuan (approximately $1.5 billion).

 

According to the CBIRC, Chinese banks recorded 4,658 instances of banking fraud in 2020, a 23.4% increase compared to the previous year. The total value of these cases was approximately $2.2 billion, or 14.2 billion yuan. During the first half of 2021, the CBIRC uncovered 1,700 instances of banking violations totaling 12.5 billion yuan (approximately $1.9 billion).

 

In recent years, the Chinese government has taken measures to tighten regulations and crack down on banking fraud. The CBIRC announced in 2019 that it would impose harsher penalties, including fines and operation suspensions, on banks that violate regulations. In addition, the government has enacted new regulations to strengthen anti-fraud measures, such as requiring banks to conduct more comprehensive background checks on loan applicants.

Recommended for you

Online Gaming Licenses in Vanuatu - A Comprehensive Guide to Vanuatu gaming license
29.05.23
GBO’s gaming experts will assist you to obtain a Vanuatu Gaming License – contact us below a for price offer   Full legal package | company formation | bank accounts in Europe | Easy Process 🙂 We license all iGaming Products – online casinos, apps,...
Banking solutions for global businesses
29.05.23
GBO, a renowned corporate service provider, is dedicated to offering exceptional banking solutions for global businesses and the European market.   Our experienced team is ready to assist you in finding the perfect banking solution that aligns with your company's requirements.   At GBO, we...
Anjouan Corporate Services: GBO's Comprehensive Solutions for Business Success
28.05.23
GBO Corporate Services: Your trusted partner for Anjouan corporate services of gaming licenses, company formation, Forenx & crypto license   GBO Corporate Services is a leading provider of comprehensive solutions for entrepreneurs and companies seeking online gaming licenses in Anjouan, Comoros. With our expertise in...