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SPDB leads the domestic banks in terms of individual financial strength
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According to a recent league table developed by China Chengxin, a local credit rating agency, China Merchant Bank and SPDB lead all domestic banks in terms of individual financial strength and the big four state banks' individual financial strength is not as good as their comprehensive financial strength..
This is the first time a local rating agency has ever rated the individual financial strength of domestic banks, a further step to improve the former rating-system which is based on comprehensive financial strength of the whole banking industry.
The rating takes into consideration the external environment impacting the credit quality of the bank, operation factors, internal risk control and other financial factors, without taking into consideration the factor of external support. The rating reflected a bank's own financial strength. The big-fours achieved the highest rating in comprehensive financial strength, but in terms of individual financial strength, they fall behind China Merchant Bank and SPDB, who lead the 14 domestic banks.
China Chengxin believed that with the continuously-improving regulation and more international and transparent regulatory methods implemented, the banks will further improve their information disclosure. Meanwhile, with all the state banks started the reform towards joint-stock banks and the whole banking industry became more market-oriented, it has become a necessity for rating agencies to launch unsolicited ratings of banks. Besides, these rating results will help investors and creditors to have a much better of the banks' own financial strength.
The agency pointed out that the reason why the big-fours appeared stronger in comprehensive strength than in individual financial strength is that the agency not only took into consideration the possible support from the creditors and government but also their important position in the domestic financial circle and the background of the shareholders and the continuous support from the government. Thus before those banks had begun their reform, their credit rating is equal to that of sovereign rating. The rating agency also said that they will pay attention to the reform of the big fours and make adjustment of their ratings according to the changing situation.
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