Bausparkasse, the country's first specialized joint venture
between a Chinese bank and a foreign bank, opened in north China's
Tianjin
Municipality on February 15.
The bank, with registered capital of 150 million yuan (US$18.1
million), was jointly established by the China Construction Bank
(CCB) and
Germany's Bausparkasse Schwabisch Hall AG.
The Chinese bank owns 75.1 percent of the joint venture, with
the German partner holding the rest. The JV will mainly engage in
housing loans.
Individual homebuyers who hold specified minimum balances in
their accounts at the new bank will be allowed to borrow mortgage
funds at a reduced interest rate.
The interest rate for a one-year loan from the bank is 3.30
percent, much lower than the 4.77 percent for the same term for
ordinary housing loans offered by other commercial banks.
Bausparkasse Schwabisch Hall AG is the largest housing loan bank
in Germany, with a history in the business of more than 70
years.
The company has also extended its services to countries such as
the Czech Republic, Slovakia and Hungary.
The new joint venture in Tianjin was established after years of
preparation.
In 1994, when the Chinese government launched the program to end
its welfare housing system, Bausparkasse Schwabisch cooperated with
Chinese organizations such as the Ministry of Construction, the
and the Ministry of Finance to explore the possibility of
introducing German-style housing loans in China. The result was
positive and the project won support from higher authorities.
In 1999, the German bank opened a representative office in
Beijing.
Two years later, the bank signed an agreement of intention with
CCB, China's leading housing loan provider, for the establishment
of a joint venture housing bank here. They got the nod from the
central bank in October 2002.
Experts say CCB's strong position in China's housing loan market
and Bausparkasse Schwabisch's experience in the field will provide
a good platform for operation of the new joint venture.
Establishment of the joint venture bank also suggests that
Chinese financial authorities are strictly abiding by the nation's
promise to open the banking sector gradually after entering the
World Trade Organization in December 2001 said Niu Li, a senior
economist with the State Information Center.
By teaming up with foreign financial institutions as partners or
equity owners, Chinese banks are expected to obtain first-class
management expertise to help them survive the mounting competition,
he said.
The foreign banks, in turn, will gain first-hand knowledge of
China's banks, enterprises and the economy, which is crucial to a
bank's operation in a foreign country, he said.
Foreign banks have been speeding up their cooperation with
Chinese banks over the past several years.
(China Daily February 17, 2004)