China's State-Owned Banks Lead the Charge Against "Involving" Competition!
With the nickname of "宇宙行", China's state-owned Bank of Communications has become the first major bank to publicly declare its intention to crack down on "involving" competition!
On July 30, Bank of Communications held a meeting on party-building and mid-year management work. The bank explicitly stated that it will lead the charge in regulating "involving" competition.
As the first major state-owned bank to publicly declare its opposition to "involving" competition, Bank of Communications has already expressed related statements at the beginning of the year. Liu Jun, the chairman of the bank and director of the Pricing Self-regulation Mechanism Committee, published an article in the first issue of China Financial this year, emphasizing that large commercial banks should take the lead in strengthening self-regulation management and refusing to engage in "price wars".
In recent years, various banks have convened mid-year work meetings, with "anti-involving" becoming a key keyword for their future development. Industry insiders pointed out that Bank of Communications' public declaration has not only reflected the bank's determination to regulate "involving" competition but also driven the entire banking industry towards a new round of high-profile competition.
State-Owned Banks Take the Lead in Regulating "Involving" Competition
The bank's mid-year work meeting, which typically reflects the bank's key words for development in the second half of the year, has conveyed a strong signal to the outside world that state-owned banks are taking action against "involving" competition.
Bank of Communications explicitly stated that it will implement detailed and specific policies for its mid-year work, focusing on product customer positioning, leading the charge in regulating "involving" competition, effectively preventing and resolving key risks, and solidifying its operating foundation. It will also continue to expand asset liability management, deepen service quality, and cultivate new kinetic energy.
Sheng Jingfu, vice president of the Financial Research Institute, told Securities Times that as a leading bank, Bank of Communications' move has a strong demonstration effect. Currently, regulatory authorities have clearly indicated their direction on "quality enhancement" and "anti-involving" competition for the financial industry. State-owned banks typically maintain high consistency in implementing policies and protecting the industry ecosystem.
He added that for shareholding banks and small and medium-sized banks, state-owned banks taking the lead in regulating "involving" competition will mainly affect two aspects: on the one hand, it may reduce the intensity of price wars, creating a relatively fair competitive environment for smaller banks; on the other hand, it may drive industry logic from "competing by scale and cost" to "competing by service and innovation", prompting smaller banks to strengthen their risk management capabilities and fine-tune their operating levels.
However, in the short term, some small and medium-sized banks that heavily rely on price-based competition may face a transformational pain.
"Anti-Involving" Becomes a Key Keyword for Banks' Mid-Year Meetings
Following Bank of Communications' declaration, shareholding banks, city commercial banks, and other financial institutions may follow suit.
From recent dynamics, the banking industry has been plagued by "involving" competition for a long time: all-out price wars, relaxed risk management, and uniform services. For example, PBOC has held a mid-year work meeting and anti-"involving" competition promotional conference.
The Guangfa Bank also stated at its mid-year work meeting that it will implement financial regulatory authorities' requirements, prioritize financial work's party-building and people-oriented nature, resist "involving" competition, and maintain long-termism in its operations.
Dong Xiuming, a research fellow at the Shanghai Financial and Development Laboratory, pointed out that China's banking industry has been plagued by "involving" competition in recent years, primarily characterized by irrational price wars, relaxed risk management, uniform services, and distorted evaluation mechanisms. For instance, some large commercial banks have used "manual interest compensation", "storage point adjustment", and other methods to artificially inflate their scale. On the asset side, personal lending rates have exceeded 3%, below the cost of funds.
"Overall, these behaviors not only erode bank profits but also bury financial risks." Dong Xiuming emphasized that the banking industry should promote moderate competition and prevent excessive competition. Financial regulatory authorities should take effective measures to drive the formation of a multi-level, widely covered, and diversified financial institution system.
Regulatory Authorities Further Promote Industry "Anti-Involving" Efforts
According to insiders close to regulatory authorities, the regulators have previously issued guidance documents on industry self-regulation, without strong legal backing.
However, recent developments indicate that regulatory authorities are actively considering strengthening supervision and regulation. For instance, Guangdong Financial Supervision Bureau has published a negative list for "involving" competition in the banking and insurance industries, guiding industry associations to research and formulate self-regulatory norms.
In the future, more regions are expected to follow this model of regulatory authorities strengthening supervision + industry association self-regulation guidance to promote financial industry "anti-involving" efforts. Insiders close to regulators told reporters that regulatory authorities can now monitor and quantify banking industry's low-price competition through digital means. The next step will be to combine this data with self-regulatory norms, guiding institutions towards healthy competition. If an institution still engages in related "involving" behaviors, the regulator will investigate and take further action according to law.