Wenxian ZHANG

Originally known as the “People’s Construction Bank of China,” the Chinese Construction Bank (CCB) is one of the big four banks in the People’s Republic of China (PRC) and has been making significant contributions to Chinese economic development for more than half a century, including the financing of such controversial projects as Three Gorges Dam construction.

Founded on 1 October 1954, the bank was wholly state owned under the direction of the Ministry of Finance of the People’s Republic of China (PRC) and in charge of administering and disbursing government funds for construction and infrastructure-related projects. For decades the bank had played a key role in the planned economy of mainland China.

In 1979 the People’s Construction Bank of China became a financial institution under the direction of the State Council and gradually assumed more commercial banking functions. In 1994, after the establishment of the China Development Bank, the People’s Construction Bank of China became a full-service commercial bank, and two years later its name was changed to Chinese Construction Bank. Since then it has become a leading commercial bank in China, providing a comprehensive range of services. As the bellwether in China’s financial reform, in late 2003 the State Council approved CCB’s application to become a shareholding bank. On 17 September 2004, Chinese Construction Bank Corporation was founded.

The year 2005 was important in the history of the bank. In March CCB Chairman Zhang Enzhao resigned for “personal reasons.” However, a lawsuit in the United States alleged that he received a bribe of $1 million from Alltel Information Services for securing a contract. Despite the negative publicity, the Bank of America decided to acquire a 9 percent stake in Chinese Construction Bank for $3 billion later that year. This measure represented the U.S. company’s largest foray into China’s growing banking sector. Bank of America was looking to greatly expand its Chinese business, which then had only branch offices in Hong Kong, Shanghai, and Guangzhou (Canton). On 27 October 2005, Chinese Construction Bank made an initial public offering on the Hong Kong Stock Exchange, and since February 2006 the share price has risen about 50 percent. In late 2007 CCB made China’s second-largest initial public offering of 57.12 billion yuan ($7.6 billion) on the Shanghai Stock Exchange.

Corporate Strategies

Chinese Construction Bank is currently among the market leaders in China in a number of products and services, including infrastructure loans, residential mortgages, and bankcards. Its core business consists of three principal segments: corporate banking, personal banking, and treasury operations. With the goal of becoming a world-class bank, CCB has a corporate strategy of focusing on its customers, products, and geographical regions. The bank has strived to strengthen its historically strong relationships with large corporate customers by focusing on leaders in strategic industries such as power, telecommunications, oil and gas, and infrastructure, as well as major financial institutions and government agencies, and by developing relationships with small-and medium-enterprise customers. In the personal banking segment CCB seeks to increase revenues from high-income retail customers while capitalizing on its cost efficiency and economy of scale to serve mass-market customers more efficiently. In terms of its services, CCB has developed both wholesale and retail products with a focus on fee-based businesses, including payment and settlement services, personal-wealth management, and corporate-treasury management. In light of high savings rates and a booming real estate market in China, CCB also endeavors to increase its personal banking business with a focus on residential mortgages, diverse savings products, and an industry-leading credit card business. Its geographical focus is in the major cities of the more developed markets of the Yangzi (Chang) River delta, Pearl River delta, and Bohai Rim regions. In addition, the company has an ambitious goal of growth in the capital cities of inland provinces in China. CCB has already built an extensive customer base and established relationships with many of the largest business groups and leading companies in industries that are strategically important to China’s fast-growing economy. Its network includes approximately thirteen thousand branch outlets.

International Expansion

During recent years CCB has also expanded internationally. The bank is a member of the Global ATM Alliance, a joint venture of several major international banks that allows customers of the banks to use their ATM card or check card at another bank in the Global ATM Alliance with no fees when traveling internationally. In addition, CCB maintains overseas branch operations in Hong Kong, Singapore, Frankfurt, Johannesburg, Tokyo, and Seoul and has representative offices in New York and London. In 2006 CCB acquired Bank of America (Asia), which started in 1912 in Hong Kong as Bank of Canton with a subsidiary in Macao. After the acquisition Bank of America (Asia) became the Chinese Construction Bank (Asia) Corporation. CCB’s other subsidiaries include Chinese Construction Bank (Asia) Limited (formerly Jian Sing Bank Limited), Sino-German Bansparkasse Co., and Chinese Construction Bank Principal Asset Management Co. In 2007 Fortune magazine ranked CCB at 230 on its Global 500 List (CCB had previously ranked 277). Within the banking sector CCB is ranked 34, with annual revenue of more than $28.5 billion.

Further Reading

China Construction Bank corporate profile. (2007). Retrieved December 20, 2007, from http://www.ccb.com/portal/en/home/index.html

China Construction Bank website. (2008). Retrieved November 19, 2008 from http://www.ccb.com/portal/en/home/index.html

Source: Zhang, Wenxian. (2009). Chinese Construction Bank. In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 360–361. Great Barrington, MA: Berkshire Publishing.

Chinese Construction Bank (Zh?ngguó Jiànshè Yínháng ??????)|Zh?ngguó Jiànshè Yínháng ?????? (Chinese Construction Bank)

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