China: History

This chapter focuses on the banking industry in China. The four cornerstones of the Chinese banking industry are Bank of China, China Construction Bank (CCB), Agricultural Bank of China, and Industrial and Commercial Bank of China (ICBC). Originally, these banks were restricted to offer their services in the areas suggested by their names, but over time the restrictions were lifted allowing them to compete with one another for loans and deposits, creating more of a natural market. The mid-1990s also saw the establishment of a number of new banks, owned primarily by institutional investors, again adding to the competitive landscape, with another change being the establishment of the local city cooperative banks. The first real investment bank, China International Capital Corporation Limited, was formed in 1995 as a joint venture between Chinese and foreign financial institutions, notably China Construction Bank and Morgan Stanley. This bank carries out the typical investment banking functions of advisory, origination and trading, and building up business and reputation for bringing equity and debt deals to the markets domestically and internationally.