Best bank:
Bank of China
Best equity house:
China International Capital Corporation
Over the past 12 months a lot of noise has been coming out of China. It is now commonly understood that for the People's Republic to realize its enormous economic potential there will have to be serious structural reform. The financial sector has come under intense scrutiny. To change the banks is a major task. These are large institutions employing large numbers of workers. ICBC for example, China's largest bank and last year's winner, has 500,000 employees. Trying to get such monstrous institutions to start thinking about the bottom line will take time.
The banks' quality of assets and non-performing loans receive the most attention. But perhaps most worrying is that nobody really knows how big the problems are. A single number is not enough to encapsulate them. Policy loans made 15 years ago are no longer traceable, and loans that were made only six months ago have in many cases quickly turned bad.
The best bank in China this year is, like the other banks in the country, suffering asset-quality problems, but Bank of China is further down the road than others as it struggles to introduce effective risk and credit management systems.