With China"s entry into time World Trade Organization, China has decided to implement a phased reform of the wholly state - owned commercial banks. The first phase of restructuring aims at making them profit - driven entities with sound internal controls, internationally compatible prudential accounting rules, well- designed incentive structures and appropriate disclosure standards. In the second phase, they will be transformed into joint - equity commercial banks on a case- by - case basis provided they meet certain conditions. The third phase envisages publicly listing them depending on their qualifications.
The joint - equity banks are an emerging force among the commercial hanks. They operate entirely on a commercial basis and mainly serve the local economic development in large and medium- sized cities. The development of these banks contributes to competition, efficiency in financial intermediation and thereby soundness of the banking system.
The reform of time financial system and particularly the diversification of banking institutions have increased competition in the banking sector and improved financial services in China. Apart from the traditional deposit taking and lending business, commercial banks now offer a broad range of intermediary services such as international settlement, bankcards, private banking, and financial consulting.The wholly state - owned commercial banks will be reformed on a step - by - step basis.
