Banks need diversification and improvement in other territories such as intermediary business and asset management, said economist Wang Guogang, also deputy director of the Financial Research Centre of the Chinese Academy of Social Sciences. Central banker Dai Xianglong recently called on banks to expand the scope of their businesses and reduce bad loans. He urged domestic banks to expand their intermediary business, including trade transactions, foreign exchange, remittances, cash management, agency business and credit cards, which would help them improve profitability. Dai also repeated a call for commercial banks to lower their bad loan ratios by two to three percentage points a year. But out of risk concerns, authorities have not given a clear indication concerning further business expansion by the banks, such as doing securities business directly, though some analysts believe it will gradually move in that direction.
Insurance companies seem to be more advanced in the sector.
Some of them have already received the go-ahead to invest their money in securities investment funds as an indirect way to trade stocks. Three insurers were recently allowed to put all their premium income from unit-linked products into securities funds. All rights reserved.