China to create fifth largest bank from postal savings system

China has approved a plan to turn the nation's huge postal savings system into a bank, which is set to become the nation's fifth largest lender, according to state media.

The approval for the China Postal Savings Bank to start operations was given by the China Banking Regulatory Commission, the China Daily reported.

The bank will be wholly owned by the China Post Group, a 10-billion-dollar company formed out of the State Post Bureau, formally both the supervisor and a major player in postal services, the China Daily said, citing the commission.

Industry experts see the move as an attempt by the government to develop the rural economy as most of the postal savings outlets are in the rural areas, according to the report.

"China Postal Savings Bank will focus on developing retail and intermediary businesses, to offer basic financial services for residents," the newspaper quoted a statement of the commission as saying.

In 2005, there were more than 36,000 postal savings outlets across the country, with two thirds of them distributed in the rural areas.

Post offices in China started postal savings services in 1986 but they could only accept deposits from the public and not offer loans, the report said.

The deposit balance of post savings recorded 1.3 trillion yuan (166 billion dollars) by the end of 2005, accounting for nearly 10 percent of China's household savings.

Cai Ersheng, vice chairman of the CBRC, said the postal savings bank would become the fifth largest lender in China after the big four state-owned banks, the overseas version of the official People's Daily said in August last year.

The biggest four lenders in China are the Industrial and Commercial Bank of China, the China Construction Bank, the Bank of China and the Agricultural Bank of China. Up till now, Bank of Communications was the fifth largest.

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