State okays new postal savings bank
By Zhao Renfeng (China Daily)
Updated: 2005-07-29 06:16

Challenges & obstacles

However, due to a lack of experience in managing funds and hedging risks in capital markets, the postal savings service faced a number of challenges.

"With the rapid development of postal savings business, the current operating system which mingles together postal savings with other postal business has created many problems," read the CBRC statement.

As they are part of the postal system, postal savings lack sound corporate governance and an internal control system. Also, since the sector is not a real financial entity, it's difficult to open up investment channels.

Another important obstacle in the path of reform is that staff in postal savings can move to other departments without too much trouble and vice versa. Therefore, some staff in the business lack the necessary skills.

Some experts have suggested turning the postal savings sector into a commercial bank with a limited business scope in low-risk wholesale banking services and negotiable loans.

The bureau should also make full use of its vast branch network to promote remittance and intermediary services, the experts said.

According to the regulator's statement, it has taken a series of steps to transform the postal savings sector into a genuine commercial bank, while striving to improve its risk-control and compliance capabilities.