The IFC invested $27m in a 15% stake in Nanjing, based in the capital of China’s fast-growing Jiangsu province, in 2001. So far no other foreign lenders have followed suit. The bank signed a co-operative agreement with South Korea’s Hana Bank in 2003.
In the past four years, the IFC has helped Nanjing to improve its credit and risk management polices, transforming it into a relatively well-run commercial lender by bringing its management in line with international practices. The bank’s NPL ratio was 3.32% by the end of June 2004, much lower than the 14.8% average for the country’s 111 city commercial banks. It has a capital adequacy ratio of 9.59%, above the 8% minimum requirement, and far exceeding the city banks’ average of 6.79%. Nanjing’s shareholders approved plans for a domestic IPO of about 700 million A shares to be sold to domestic investors this year.
Despite its relatively high profile, Nanjing is not on a par with the top city commercial banks, Bank of Beijing, Bank of Shanghai, Jinan City Commercial Bank and Xi’an City Commercial Bank – all of which already have foreign partners.
Nanjing Bank, set up in 1996 through a merger of 40 urban credit co-operatives, is relatively small, with 58 local branches and total assets of Rmb29.58bn, compared with the Bank of Beijing’s Rmb200bn in total assets. Its diverse shareholding structure includes the Nanjing city government, the district government, nine state-owned enterprises, five large private companies and more than 800 small and medium-sized companies in Nanjing. Unlike many other Chinese banks, a majority of its ownership is held by non-state entities, including 6000 private individual shareholders, of whom 1200 are employees. Its mission is to lend mainly to fast-growing small and medium-sized enterprises, which account for 90% of its total lending, according to the World Bank.
Nanjing’s president, Zhang Ning, is not as well known as the heads of Minsheng and Huaxia. Like many other top city commercial bank executives, he is a former central bank official. He worked for 14 years at the Nanjing branch of the People’s Bank of China, rising to deputy president before taking the post at the city bank in July 2002.
