Study Of A Commercial Banks’ Interbank Business Transformation

With the accelerated interest rate liberalization process in recent years,Chinese commercial banks are facing an evitable,strategic transition from the traditional profit model that relies on fixed loan-deposit spreads.Under the combined influence of profit growth,capital restrictions,and risk control,inter-bank businesses have experienced an significant growth and have become a key factor in driving the development of commercial banks forward.National joint-stock banks and certain regional banks are leading the trend in switching their focus to inter-bank businesses and have witnessed significant growth in the percentage of inter-bank businesses in their overall operations thanks to the adjustments in areas including strategic planning,organizational optimization,and balance control.Whereas major commercial banks are lagging behind in their transition to inter-bank businesses,their potentials are enormous.By definition of the regulatory,inter-bank business refers to “Business conducted among domestic financial institutions established under the restriction of the law,the main business types include: lending,interbank deposits,interbank loans,interbank payment,resale(repurchase),inter-bank financing and investment”.After several years of development,inter-bank business has proven to be of significant importance in facilitating liquidity management,optimizing financial resource allocation,and serving entity economy.The business has,at the same time,shown its defects in terms of the lack of regulations,inadequate information disclosure,avoidance of financial supervision,as well as macro control.Therefore,under the enforcement of “Notice of the general office of the China Banking Regulatory Commission on regulating the administration of interbank business of commercial banks”([2014]140),commercial banks have started transitioning their inter-bank businesses towards exclusive headquarter operations and multi-dimensional innovation.Commercial Bank A is one of the major state-owned commercial banks.Since the implementation of the new regulatory,Bank A has adopted a top-down approach and actively adjusted its management structure of inter-bank businesses.Bank A has become the first bank in its sector to have completed the transition to exclusive headquarter operations.In the past two years since the transition Bank A has significantly improved its inter-bank business.During the transition the bank has continuously encountered obstacles and has found ways to solve them and move on with the change,through the process of which precious experience has been earned.This thesis focuses on analyzing the transition process of Bank A and strives to provide an optimized solution to this booming trend.In the first section of the thesis the theoretical basis of inter-bank business transition and the current state of Chinese commercial banks were detail explained.The next section was mainly focused on Bank A’s operational status in its inter-bank businesses.The problems that Bank A had encountered were analyzed using combined approaches in order to find out the underlying causes and to suggest corresponding solutions for a more stable development of its inter-bank businesses.The findings of this thesis will also provide references for other major commercial banks in hope of improving their inter-bank businesses and cover the current gap in the research of transitional major commercial banks in China.