Until recently, most banks in China were owned either by the central government or local municipal governments. Private banks were very rare in China. The industry is tightly regulated, with deposit interest rates controlled by the authorities and all bank savings enjoying the implicit backing of the state. The biggest Chinese banks, which also happen to be some of the largest in the world, are all state-run. However, things are changing.
While allowing outside banks to expand into the Chinese market, the Chinese are also looking at outside expansion as well. The prospects of competing more globally with the Chinese will be most interesting.
For example, earlier this year, ICBC bought a controlling stake in the London-based global markets business of Standard Bank Group Ltd. in South AfricaSBK.JO in Your Value Your Change Short position , a move that allowed it to expand into trading commodities, interest rates and currencies. Standard Bank, in which ICBC already had a stake, is Africa’s largest lender. For Western banks, this growing competition will likely mean increased pressure on fees and thinner profits