China Financial Daily:PBOC Zhou,No Tolerance on High Financial Leverage

ICBC kicked off its four-day reverse roadshow today in Beijing, with more than150 investors/analysts in attendance. Its management elaborated the bank'sstrategies, highlighted recent operating trends and provided long-term outlookfor profitability. We maintain ICBC as our top pick among the sector onstronger-than-peers retail franchise and improving provision coverage.

    China needs to ensure healthy financial institutions in order to prevent financialcrisis and there is no tolerance on high financial leverage, low funding cost andhidden NPLs, according to Zhou Xiaochuan, the governor of PBOC as sayingon Lujiazui forum. Zhou also pointed out that many financial institutions inChina have improved a lot on risk management, pricing and anti-moneylaundry, and adapted themselves to international competition. China willfurther open its financial services industry to remove industry protection. CBRCvice president Wang Zhaoxing also attended the conference and said Chinawill deepen financial reform and use MPA, interest rate mechanism andprovisioning regulation as anti-cyclical tools to fine tune macro financialcondition and prevent financial crisis.

    Qingdao Bank, Shengjing Bank and Huishang Bank, three city commercialbanks who were already listed in HKEx, have suspended review process for Asharelisting recently, leaving H-share listed Harbin Bank and Zhengzhou Banklining up for A-share IPO, local media reported. Some of H-share listed Chinasmall banks seek for A-share listing as it seems to be much easier for banks toget listed in A-share market since last year. However, none of them havesuccessfully got A-share listing so far.