China Development Bank Corp. (CDB)was officially launched in Beijing on Tuesday, as the policy bank transforms itself into a commercial organization.
As one of the three major policy banks, CDB's move was a major step in China's financial reform.
With a registered capital of 300 billion yuan (44.12 billion U.S. dollars), the new corporation inherited all the assets, liabilities and business of the original bank, which was set up in1994 to organize financing for infrastructure projects and major industrial development.
Central Huijin injected 20 million U.S. dollars in December 2007 to facilitate the reform of the bank. The reform schedule gotapproval from the cabinet, the State Council, in February this year.
The Ministry of Finance and Central Huijin are CDB's two shareholders, holding 51.3 percent and 48.7 percent stakes, respectively.
At the end of 2007, CDB had 320 billion yuan of net assets and 2.89 trillion total assets. It had 2.26 trillion yuan in loans, ofwhich less than 1 percent were non-performing.
As a policy bank, CDB used to raise money mainly by issuing state-backed bonds to other financial institutions. But after the bank goes commercial, these bonds will be less attractive as they will no longer have a credit rating equal to government bonds.
This change will make it more difficult and expensive for the bank to raise money, said analysts.
"Our bank is actively contacting investment banks and other general partners and limited partners, in an effort to make further innovations in our marketing and commercial operations," CDB official Xiao Yanzong said.
Source: Xinhua
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