Minsheng has big plans for small business

Banks will strive to transform themselves to meet the needs of small and micro businesses, said Lin Yunshan, assistant president of China Minsheng Banking Corp during the seventh 21st Century Annual Finance Summit of Asia, which concluded on Dec 2 in Beijing.

Lin's comments echoed Premier Wen Jiabao's report on this year's two sessions, in which he said China will deepen the reform of its financial systems by improving services for small and micro businesses.

A private bank, China Minsheng Banking Corp began working with small and micro businesses in 2009. By December 2011, the loan balance from small and micro businesses had surpassed 300 billion yuan ($ 48 billion).

Lin said Minsheng now has more than 830,000 small and micro business clients, and the average loan for each is around 1.7 million yuan, providing job opportunities for more than 2.4 million people.

"Our goal is to have more than 1.5 million small and micro business clients in 2014 and reach 2 million such clients in 2015," Lin said.

He noted that China has 44 million small and micro businesses and related privately or individually owned business.

"The problem is not reaching the target but how to reach it," he added.

When Minsheng Bank first began lending to small and micro businesses, it put about 50 percent of its annual loan resources directly in the area. In 2013, the bank will continue lending at this level.

To reach its targets, the company will undergo some changes to its operations and organizational structure. In the future, it will have three kinds of branch banks.

The first type of banks will mainly operate with small and micro businesses. The second is oriented toward traditional retail businesses and will focus on comprehensive services instead of capital businesses. The third will be community banks.

Minsheng Bank has also made major shifts in business procedures to control costs.

"From our perspective, the biggest pressure of operating with small and micro businesses comes from the costs that take place in the process," Lin said.

Minsheng Bank will build urban business operations and provide electronic services to better serve small and micro businesses.

Although some say that grassroots economy needs grassroots financial services, Lin said that Minsheng Bank's management believes that big and medium-sized banks have broader development space for supporting small and micro businesses if they handle the process well.

"We would like to put more efforts toward operating with small and micro businesses," he added.

Small and micro businesses do not necessarily mean high profits, Lin noted.

In terms of direct valuation, currently Minsheng Bank's return rate from small and micro business operations is some 1.2 percentage point higher than the return from big company operations.

But if human resource and other operational costs are taken into consideration, the return rate from small and micro businesses is not that high.

"So it is problematic with the perception that banks do small and micro business operations because of high return rate," Lin said.

However, he went on to say, if these operations are properly and efficiently controlled, then the return rate could be relatively higher.

At the end of the speech, Lin said that the development of Minsheng Bank has been closely related to that of China's privately owned economy during the bank's 17 years of history.

"The world's many great companies like Huawei and Apple used to be small and micro businesses. We believe that China's small and micro economy stands for the country's power from the people and from the grassroots," he said.

"Minsheng Bank is willing to develop with China's small and micro economy," he concluded.

Contact the writer at xuxiao@chinadaily.com.cn