By staff reporter Zhang Yuzhe

From Caijing Online

Postal Savings Bank of China is being restructured as a commercial bank, with its Beijing branch spearheading a new loan business initiative to be imitated by branches across the nation.

Postal Savings plans to launch corporate lending as well as a mortgage business for pre-owned homes next year. Already under way are several other pilot projects, including an urban consumer credit business as well as consumer and business lending in rural areas.

Postal Savings’ transformation from a savings institution began in March 2007 when it won a measure of independence from its parent, state-owned China Postal Group, toward the goal of becoming a self-supporting, profitable bank.

Overseeing the restructuring is the China Banking Regulatory Commission, a government agency that supports the bank’s effort to develop a broader business scope.

Postal Savings hopes to move quickly to expand its commercial business, despite its limited experience in risk management, said Xu Xueming, Beijing branch general manager. “At the moment, our biggest challenges are operational and credit risks,” said Xu.

For nearly two decades starting in 1986, Postal Savings accepted private deposits but did not offer credit services. It reported 1.54 trillion yuan in deposits as of August 1986, ranking it fifth after China’s four, major state-owned banks.

The bank has a network of post office-based branches in rural areas, but one-third of all branches are in cities. Xu said Postal Savings should offer consumer and wholesale lending in urban as well as rural areas.

Wang Jun, a World Bank economist, said the bank should take advantage of its network strength. He noted that Postal Savings enjoys a healthy balance sheet and solid capital base, and the deposit data alone is a fine recommendation for its emerging credit business.

Full article in Chinese: http://www.caijing.com.cn/2008-12-15/110039455.html