beijingwalker
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Beijing's stimulus effort also exposed another Chinese weakness — a faulty, immature financial system. Though the state owns large chunks of the banking sectors in both countries, China's bureaucrats interfere much more intrusively in the credit decisions of its financial institutions, turning them into little more than arms of government policy. That makes Chinese banks more vulnerable and less efficient in allocating resources. Indian banks, on the other hand, are run on a more commercial basis. They have greater expertise in risk management and credit analysis, and as a result, they tend to lend money more intelligently and have stronger balance sheets. We cannot understate how important that is for India's future performance. "Indian banks are stronger [than China's]," explains Mark Young, head of Asian banks at rating agency Fitch in Singapore. "There is a clear link between the health of the banking sector and the capability to support economic growth."
at least Chinese banks are brimming with foreign reserve,you dont worry about your bank of having too much more,do you?
Chinese Banks: Better Than U.S. Banks
We need to admit that banks and governments are
By DAVID WEIDNER
If you want to know the fate of bank stocks, why Bank of America Corp. may bring down the industry and the economy with it, you need to change how you think about how banking works in this country.
We tend to think of Washington and Wall Street as two separate entities. We think of the latter as private enterprise, and the former as the rule maker.
But with the financial crisis, along with the bailouts and "reforms" that followed, banking and government are more than just intertwined. They're essentially the same entity. If one falters, so goes the other.
The U.S. banking industry is more like China's than we want to admit. Except it's worse. At least China's managed financial system works in harmony and the centralized decision-making there is part of a bigger plan.
In the U.S. market, there is no plan. Instead, competing agendas of lawmakers, regulators and bankers have ground the system to a halt. Lawmakers want to please the industry as well their own constituents -- an impossible task since those interests are by nature opposed. Regulators want to flex their muscle, cover their ***** and justify their existence. The bankers just want to make a lot of money.
In the years following the banking reforms of the 1930s, even that imperfect system basically worked. But beginning with the government's promotion of home ownership and the creation of Fannie Mae and Freddie Mac, the arms-length relationship between responsible government and the private enterprise of banking has been corrupted.
During the last 30 years, banking has morphed into an arm of government, indeed a controlling one. There have been a lot of missteps, but the big blow came at the end of the Clinton administration, with the abolition of Glass-Steagall -- the law that separated retail banking from investment banking.
That move created two massive problems: It created massive too-big-to-fail entities, and allowed casino-style gambling with money vital to the nation's economic system: retail credit, mortgages, deposits and retirement savings.
What we've created is a system that is entirely dependent on huge, poorly run banks. With the bailouts, we acknowledged that the nation's fortunes and the fortunes of those banks were one in the same.
We then made a bad situation worse with another critical mistake. Instead of realizing that banks, in fact, had become a part of government, we kept pretending that it really so, that the banks were private institutions. They "paid back" the bailout money by bilking their shareholders with stock offerings.
What's becoming clear now is that when nationalization of too-big-to-fail banks was on the table in early 2009, it was an opportunity to acknowledge what the facts were: Big banks were too important to be run by a bunch of doddering managers. Bank of America [BAC] and Citigroup Inc.[C] should have been seized by the government or at least forced to keep their bailout funds until they stabilized.
Today, we know at least in Bank of America's case, that was a big mistake. The government, counterparties and investors are suing the bank into submission over mortgage products sold by the bank and its predecessors -- Countrywide and Merrill Lynch.
The lawsuits, which could cost tens of billions and force Bank of America into more drastic moves, are silly. Just two years ago, the government was rescuing the bank because it was vital to the nation's economic system. Today, it's suing the bank, pretending that any wounds inflicted won't hurt credit and the economy.
Again, the Chinese wouldn't make this sort of mistake. For all of that government's flaws, the one thing it has right is that it understands banking is vital to economic planning. You can bet the Chinese wouldn't sue their own banks for practices the government planners tacitly or directly approved.
So, you can see the problem. The bad news is that Washington is in denial; Wall Street is in denial. The good news is that most investors aren't. They've pounded bank stocks, and they've pounded them for good reason.
Until government officials and bankers acknowledge the depth of the crisis and that it's in their interests to work together, we're going to be stuck in this mess.
Legal liability will hang over the banks. They'll have to hoard cash to meet capital requirements. They'll be reluctant to lend. And don't think this is a problem just for B. of A. Banks continue to be intertwined through derivatives and counterparty agreements. If there's a run on one bank, you can bet the problem will cascade through the system like it did in 2008. One only needs to look at the dominoes in Europe to see how little has changed. Read our coverage of European markets.
The solution would be to end the charade. The government could acknowledge that these megabanks are too important to the system and back their balance sheets with an explicit guarantee. Washington could call off the legal dogs and give the banks amnesty from financial penalties for fraudulent practices made leading up to the financial crisis.
If it sounds like socialism, you're right. But we're already there. We just won't admit it. Investors shouldn't pretend it's some other way either.
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at least till now Chinese banks still make the profit in the world
Chinese banks dominate The Banker’s Top 1000 ranking
Chinese banks account for the largest slice of global banking profits, according to The Banker magazine’s Top 1000 World Banks ranking out today.
While global banking profits have recovered to almost pre-crisis levels, Chinese banks’ profits have soared by 95% over the past three years and now account for 21% of total global banking profits.
In the main ranking of The Banker’s Top 1000, based on capital strength, Chinese banks hold three of the top-ten positions – up from just one last year. Industrial Commercial Bank of China (ICBC) has moved from 7th place to 6th; China Construction Bank has risen from 15th to 8th and Bank of China has moved from 14th to 9th place. Agricultural Bank of China, the only one of the big four Chinese banks not in the Top 10, has risen from 28th to 14th.
While four years ago British banks were the second most profitable in the world, with profits at 58% below their peak in 2007 they are now behind US, Chinese, French and Japanese banks. The Royal Bank of Scotland is down from 4th to 10th place, Barclays from 10th to 12th and Lloyds from 12th to 18th.
“With the Chinese economy growing so fast Chinese banks would be expected to accelerate, but the poor state of much of the British banking sector three years after the crisis is surprising,” says The Banker’s editor Brian Caplen. “The ranking very clearly shows the shift in the centre of gravity for the world economy from Europe to the major emerging markets.”
Other major emerging economies have also shown gains in this year’s ranking. Brazil’s banks have some of the highest returns on average capital at 32%, while India’s banks have increased profits by 115% since 2007. UK banks have a return on average capital of 9.6% and their non-performing loans now stand at 5% – more than double the levels of Brazil, China and India.
Kristina Eriksson
---------- Post added at 10:09 AM ---------- Previous post was at 10:07 AM ----------
facts and figures speak louder than pale words.
Chinese banks brimming with foreign exchange
The Economic Times
As China's foreign reserves piled up to over $ 3.20 trillion, the country's banks, too, were brimming with surplus foreign exchange in September, says a report.
Quoting China's foreign exchange regulator SAFE, the report by state agency Xinhua said that total surplus of Chinese banks' foreign exchange from bank-to-client transactions reached $ 26 billion in September.
During this month, institutional and individual clients sold $ 142.6 billion in foreign currencies to banks while purchasing $ 116.6 billion, the State Administration of Foreign Exchange (SAFE) said.
From January to September, more foreign currencies were sold than purchased through Chinese banks, resulting in $ 380.7 billion of foreign exchange surplus during the period, the statement said.
Foreign exchange surplus, which makes up part of China's foreign reserves along with current account surpluses and foreign direct investment inflow, do not include banks' own foreign exchange transactions or inter bank transactions, according to the SAFE.
Last year, foreign exchange surpluses made through Chinese banks' transactions with domestic clients increased 51 per cent year-on-year to reach $ 397.7 billion.
and India is poor 
