Study on the Corporate Governance Structure and Organization Structure of China Construction Bank

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Study on the Corporate Governance Structure and Organization Structure of China Construction Bank

Key Terms: Shareholding transformation
Organizational structure
Corporate governance structure

Class: Management (Friday afternoon)

Group 2: Afra Daisy Vicky Bill Chris

Study on the Governance Structure and Organizational Structure of China Construction Bank

Key Terms: Shareholding transformation
Organizational structure
Corporate governance structure

Abstract:

Starting from the pilot project of holding reform to the introduction of foreign strategic investors and then accomplishing the leaping enhancement of listing in Hong Kong, China Construction Bank became the first case of Chinese state owned bank to achieve restructuring of shareholding system. But before, the governance and organization structure of China’s SOBs has severely impacted their international competitiveness. So a question about how to establish effective governance and organization structure among SOBs has been highly concerned.

Outline:

1. History of CCB
2. The Stock Reform of CCB
3. CCB’s governance and organizational structure
4. Top management President Guo
5. Further Reflections

History of CCB

China Construction Bank is one of the largest banks in China and actually it is the second largest bank .China Construction Bank’s (CCB) history dates back to 1954 when the People’s Construction Bank of China founded as a state-owned entity. In 1979, People’s Construction Bank of China became a financial institution under the direction of the State Council and assumes more commercial banking functions. Headquartered in Beijing, CCB employed more than 300000 personnel in a network of 13977 branches and sub-branches in Mainland China, and representative offices in London and New York. CCB had established banking relationships with many of the largest business groups and leading the companies in industries that were strategically important to China’s economy. According to The Banker magazine in industries in July 2005, CCB ranked 25th among the world’s top 1000 banks based on tier-one capital. CCB began trading on the HK Stock Exchange in October 2005.

CCB had undergone substantial reforms since 1994 and tried to change itself from a policy bank to a commercial bank. In 2004, CCB Corporation is formed as a joint-stock commercial bank as a result of a separation procedure undertaken by its predecessor, China Construction Bank, under the PRC Company Law. In 2005, Bank of America acquires a 9% stake in China Construction Bank for $3 billion. It represents BAC’s largest foray into China’s growing banking sector.

The Stock Reform of CCB

The background:
With China joining in the WTO, a lot of competitive foreign banks intruded into the dynamic Chinese market. These foreign banks have put a lot of pressure on Chinese banks, especially the state-owned commercial banks. At the annual conference of Asian development bank board in 2001, four bank presidents form BC, CBC, ABC, ICBC all came up with the idea that only by picking up the company governance framework can they solve their problems and thus lifting their competitiveness.

The motivation:
1. Subjectively: motivation: There existed some fatal shortcomings in the governance framework at that time, and those would hamper the progress of going forward. These may be the fundamental reasons. 2. Objectively: motivation: Just like what I mentioned above in the background. The most direct reasons are caused by the foreign banks which put unprecedented pressure and striking on the state-owned commercial banks. SOME detailed and specific information

Although the state-owned commercial banks had been reforming for many years, they were still kept at the surface level. This phenomenon may derive from the fact that reformation always had something to do with the complicated upper-class governance and...
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