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China Research Network
On the evening of April 12, China's four major state-owned banks – Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank – collectively issued an announcement announcing the implementation of their shareholding increase plan by the controlling shareholder Central Huijin Investment Co., Ltd. (hereinafter referred to as "Huijin Company"). This action reflects Huijin's firm support for the long-term and steady development of the four major banks.
Specifically, according to the announcement, Huijin has increased its holdings in the four major banks through the Shanghai Stock Exchange trading system since October 11, 2023. As of April 10, 2024, the number of additional shares of each bank is: 287 million shares of Industrial and Commercial Bank of China, 401 million shares of Agricultural Bank of China, 330 million shares of Bank of China and 71.451 million shares of China Construction Bank, with a total increase of more than 1 billion shares.
For ICBC, Huijin's increased holdings accounted for about 0.08% of its total share capital, while Huijin's total holdings of ICBC's A-shares accounted for about 34.79% of its total share capital. This shows that Huijin, as an important shareholder of ICBC, has deep confidence in its development.
It is worth noting that the four major banks all stated in the announcement that Huijin's shareholding increase is their commitment and support for the long-term and steady development of the banks. This also further strengthens the market's confidence in the future development of the four major banks.
To sum up, Huijin's shareholding increase plan is a strong support for the long-term and steady development of China's four major state-owned banks, and it is also an affirmation of the steady operation and good performance of these four banks. This action not only enhances the capital strength of the four banks, but also lays a solid foundation for their future development.
According to the analysis released by the China Research Institute of Puhua Industry Research Institute
Huijin's confidence in the long-term and steady development of the four major banks is mainly based on the following aspects:
First of all, as China's large state-owned commercial banks, the Big Four have a deep market foundation and extensive business networks. They occupy an important position in the domestic economy and have a large customer base and market share, which provides a solid foundation for their long-term development.
Second, the Big Four banks have made significant progress in risk management, internal control, and business innovation. They have improved operational efficiency and profitability by continuously optimizing business processes, improving service quality, and enhancing risk management. At the same time, the four major banks also actively responded to national policies, supported the development of the real economy, and made important contributions to economic and social development.
In addition, as the controlling shareholder of the four major banks, Huijin has an in-depth understanding and evaluation of its operation management and business development. By increasing its holdings in the Big Four, Huijin further demonstrates its confidence and recognition of the future development prospects of the Big Four.
Finally, with the continuous growth of China's economy and the continuous opening up of the financial market, the Big Four banks are facing broad market space and development opportunities. Huijin believes that the four major banks will continue to give full play to their own advantages, strengthen internal management, promote business innovation, and achieve long-term steady development.
To sum up, Huijin's confidence in the long-term and steady development of the Big Four Banks stems from the Big Four's own strength, market position, risk management capabilities and future development opportunities. This confidence is also reflected in Huijin's continuous increase in holdings and support for the four major banks, indicating that Huijin is willing to face challenges, seize opportunities and achieve common development with the four major banks.
Upstream includes capital providers such as sovereign wealth funds, pension funds, insurance companies, high-net-worth individuals, etc. These institutions and individuals provide a source of funding for investment banks and are the basis for investment banks to conduct their business. Their funding needs and risk appetite have a direct impact on the investment bank's business model and strategy.
In the middle of the industrial chain, investment banks are at the core. They meet the needs of downstream clients, including corporates, government agencies and other investors, by providing professional financial services such as securities underwriting and brokerage, private placements, mergers and acquisitions, project finance, corporate finance, fund management, etc. The business capability, innovation ability and service quality of investment banks directly determine their competitive position in the industrial chain.
The downstream is the demand side of funds, including various enterprises, government agencies, etc. Their needs for investment banking services are diverse, including financing, investment, risk management, etc. At the same time, with the development of the global economy and the deepening of the financial market, the needs of these customers are also escalating and changing.
From the perspective of supply and demand, the supply and demand layout of the investment banking industry is affected by a variety of factors. The macroeconomic environment, policy orientation, and market competition pattern will all affect the business scale and profitability of investment banks. At the same time, technological progress and innovation also provide new opportunities and challenges for investment banks.
In terms of industrial chain synergy, investment banks need to maintain close cooperative relations with upstream and downstream partners to jointly promote the healthy development of the industrial chain. For example, establish a good communication mechanism with upstream capital providers to ensure the stability and diversity of funding sources; Maintain close business relationships with downstream customers, understand their needs and provide customized solutions; Cooperate and compete with competitors in the same industry to jointly promote the innovation and development of the industry.
In 2023, the net interest margin of China's banking sector will enter the era of below 2% across the board, reflecting a slowdown in bank revenues and profitability. In addition, many domestic commercial banks have experienced excess liquidity, asset business continues to shrink, and profitability is facing challenges. Despite the challenges, China's banking sector has maintained an average growth rate of more than 10% in terms of assets, and the increase in loans has reached a new high. Banking financial institutions continue to optimize the credit structure, especially in the fields of manufacturing, science and technology, and green credit.
Digital transformation has become an important trend in the investment banking industry. With the continuous development of technologies such as artificial intelligence and big data, investment banks have stepped up their efforts in digital transformation to improve efficiency, reduce costs and improve service quality. Many investment banks have begun to use machine learning and artificial intelligence algorithms to automate and optimize investment decisions, providing more accurate and personalized services to their clients.
With the increasing attention of society to environmental protection and sustainable development, investment banks have begun to strengthen the layout of sustainable finance and green finance, and launched various financial products and services related to sustainable development, such as green bonds, sustainable development funds, etc.
Diversification of investment banking is also a notable trend. In addition to traditional securities underwriting and brokerage, private equity issuance and other businesses, investment banks are also actively involved in mergers and acquisitions, project financing, corporate finance, fund management, investment consulting and other fields, forming a diversified business structure. This diversification not only helps investment banks diversify their risks, but also improves their comprehensive service capabilities to better meet the needs of their clients.
The internationalization of investment banking is also a trend that cannot be ignored. With the deepening of global economic integration, more and more investment banks have begun to cross borders and set up branches around the world to expand their international business. This will not only help investment banks access more business opportunities, but also improve their global competitiveness.
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