China’s Big Four Banks Whittle Away at Their Branches

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China’s big four state-owned banks are paring back on their regional branches as part of efforts to cut down on costs.

Last year Agricultural Bank of China cut down on 1800 poorly performing branches as part of a standardisation drive for its more than 12,000 branches across the country.

While the other big four banks, who lack ABC’s huge regional network, aren’t pursuing such dramatic branch cut backs, they are nonetheless reducing gradually dialling back on the number of physical branches.

As of June 2016 Industrial and Commercial Bank of China had a total of 16,645 physical branches, for a reduction of 87 compared to the end of 2015, while Bank of China has shut down 10 of its domestic branches since hitting a high point of 10,693 in 2014.

The burden of a large number of low-performing branches is considered by many to be a major barrier to improving the efficiency of China’s big-four lenders.

The performance of the big four banks has consistently lagged at the very the bottom of the two dozen or so listed A-share banks in China, with their smaller rivals readily trouncing them in terms of per capita operating revenue and profit levels.

In 2015 ABC was at the very bottom in terms of per-capita operating revenue, followed by ICBC, Bank of China and CCB, varying between 1 to roughly 1.5 million yuan.

In stark contrast table leaders Bank of Beijing, Bank of Nanjing and Pudong Development Bank all posted per capita operating revenue of over 3 million yuan.

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