Bank of China

The Bank of China is one of China's four stated-owned commercial banks. Its businesses cover commercial banking, investment banking, and insurance. The Bank of China (Hong Kong), Bank of China International, and Bank of China Group Insurance are members of the Bank of China Group. It is ranked 187th in Fortune magazine's Global 500 companies in 2008 and ranked 9th among the world's top 1,000 banks in The Banker magazine in 2007.

In 1905 the government of the Qing Dynasty established the Treasury Bank, the first state bank in Chinese history. In 1908 the Treasury Bank changed its name to the Bank of Great Qing. With the approval of the government of the Republic of China, the Bank of China was formally established in February 1912 to replace the Ta Ching Government Bank. The Bank of China acted as the government treasury and handled the remittances of public funds. It served as the central bank, international exchange bank, and specialized foreign trade bank of the country at that time. It issued banknotes on behalf of the central government with the Central Bank of China, Farmers' Bank of China, and Bank of Communications. In 1928 the national government of the Republic of China set up its own central bank. Thus, the Bank of China became a commercial bank.

After 1949 the Bank of China split into two operations. One part of the bank relocated to Taiwan and was privatized in 1971 to become the International Commercial Bank of China. The other part of the bank became the mainland China state-designated specialized foreign exchange and foreign trade bank. The main functions of the bank include trade settlements and foreign exchange transactions settlements between local and foreign enterprises and banks, extension of credit to foreign currency, and renminbi (RMB) bonds and other marketable securities. It further engages in trust, financial leasing, and consulting businesses. The Bank of China group in Hong Kong and Macao is under supervision of the Bank of China. During the early stages of the reforms in mainland China in the 1980s, the Bank of China played a major role as the main channel through which China raised funds from abroad.

In 1995 the Chinese government introduced the Commercial Bank Law to commercialize the operations of the four state-owned banks: the Bank of China, the China Construction Bank, the Agricultural Bank of China, and the Industrial and Commercial Bank of China. The Bank of China specializes in foreign-exchange transactions and trade finance but is also a major domestic financial service provider. Its business scope covers commercial banking, investment banking, and insurance. The core business of the bank includes corporate banking, personal banking, and financial markets.

Personal banking makes up a third of the Bank of China's commercial banking business, and it leads in RMB credit cards.

The Bank of China was formally incorporated in Beijing as a state-controlled joint stock commercial bank in August 2004. In 2006 its revenue was US$17,645 billion and its net income was US$5.4 billion. In 2007 the total assets of the mainland China segment were US$674 billion, whereas the assets of the Hong Kong and Macao segments were US$163 billion at the end of the year, contributing about 40 percent of the whole group. Assets for the other overseas segments amounted to US$33 billion. The overseas segment only contributed 2.52 percent of the group's profits for 2007. Commercial banking is the core business of the bank and contributed 90 percent of the operating profit of the year. Corporate banking is the major business in commercial banking, which makes up 60 [Page 112]percent of the operating profit of the total commercial banking business. The personal banking business contributes one-third of commercial banking.

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