Although 10 years past, the East Asian Financial Crisis remains on the minds of Chinese banking regulators who don’t want to see a similar crisis take place on their soil, according to Henry Yu, managing director for global trade solutions at SunTrust Bank, a subsidiary of the holding company SunTrust Banks Inc.
“China learned a lot from the international banking crisis,” even though it remained unscathed by the sudden devaluations that plagued several of its East Asian neighbors, Mr. Yu told GlobalAtlanta during an interview.
He said that some of the underlying conditions in Indonesia, South Korea and Thailand that existed in the summer of 1997 are apparent today in China, especially its high growth rate and large inflows of foreign direct investment.
But China’s entry into the World Trade Organization in 2001, he added, forced the Chinese government to develop long-term plans for the gradual development of its banking sector.
Mr. Yu, who is responsible for SunTrust Bank’s key foreign bank relationships and began his banking career in 1980, said that China’s banks have complied with its WTO agreements, guaranteeing their stability, but that their product offering remains rather primitive.
He predicted that the banking sector will continue to evolve, saying that this is an important year for the sector because foreign banks are now allowed under certain conditions to become partial owners of Chinese banks and to provide lending and other banking services to Chinese citizens directly.
Mr. Yu said that while there are some 100 banks operating in China with more than $4.5 trillion worth of assets, only four state-owned banks control more than 65 percent of the assets.
These are the Bank of China, which specializes in foreign-exchange transactions and trade finance; the China Construction Bank, which specializes in medium- to long-term credit for long-term specialized projects; the Agricultural Bank of China, which provides financing to China’s agricultural sector and the Industrial and Commercial Bank of China, which is the largest in terms of assets and is the major supplier of funds to China’s urban areas and manufacturing sector.
“Most of the banking in China is pretty primitive,” Mr. Yu said. “Banks take deposits and make loans, but they have no credit risk management or asset and liability management, and there is a lack of transparency.”
During the past five years, however, non-performing loans have decreased to a ratio of less than 10 percent in comparison to banks in other Asian countries with non-performing ratios of 13 percent, according to Mr. Yu.
Aside from heading up SunTrust’s Asian initiatives, he is a member of its Atlanta Diversity Council. He also serves as president of the National Association of Chinese Americans, president of the Asian American Heritage Foundation and is a board member of the Georgia China Alliance, the Japan America Society of Georgia and the Chinese Community Center.
In addition, he is a foundation board trustee of Georgia Perimeter College and is a member of the international advisory board of Kennesaw State University.
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Suntrust Banks Inc. – Henry Yu, managing director, Global Trade Solutions 404.588.8297