Abstract: Recently, the China Finance 40 Forum and the China Center for International Economic Exchanges jointly held the 6th Bund Summit. During the event, CF40 and Japan’s Nomura Research Institute, they co-hosted the CF40-NRI Financial Roundtable, a closed-door seminar.
Japanese experts emphasized the need to differentiate between the types of challenges facing financial institutions, such as banks. When structural problems in the banking sector are minimal and their profitability remains strong, issues with the balance sheet can be resolved in a timely manner. Currently, while the balance sheets of Japanese banks are relatively sound, they are grappling with declining profitability due to structural changes of economy. Regional banks, in particular, are facing even greater difficulties.
Chinese experts suggested that the banking sector in China should pursue internationalization and diversification to navigate the challenges posed by a low-interest-rate environment. Currently, small and medium-sized local banks are facing increasing competition from larger banks, and they lack the capacity for internationalization and diversified operations, posing significant challenges.
However, simple mergers among banks will not solve these issues. A functional categorization of banks is needed, along with the development of more refined financial licenses to promote differentiation and diversification in the sector. At the same time, efforts should continue to advance the full convertibility of the RMB, so as to support the international operations of banks.
