Analyse Bank of China and the financial sector of China using Pestel and Swot 2018

1.0 Introduction

Bank of China is the biggest state owned commercial bank as well as oldest in China having been founded in 1912. It was 8th in the Forbes Global 2000 in 2017 (Forbes 2017). Its main competitors include Industrial and Commercial Bank of China (ICBC) and China Construction Bank. It is headquartered in Beijing, China and provides banking and other financial services such as insurance, investment banking, corporate banking, personal banking, as well as provision of finance to other financial institutions and government authorities (Forbes 2017; Bankofchina.com). As of 2017, the bank’s revenues were approximately $113.11B with profits of $24.86 (Forbes 2017).

2.0 PESTEL Analysis of Bank of China 2017-2018

2.1 Political environment

2.1.1 China’s new securitization laws

Chinese regulators opened their doors to securitization in 2016 giving Chinese big banks a push towards moving bad loans off their balance sheet (Thomas 2017). Securitization will allow Chinese banks to get rid of bad or non-performing loans, a move good for the Chinese banking system as the country’s banks will use the market to sell off poorly performing loans and this could be great potential for market growth (Thomas 2017). This will positively benefit Bank of China and many Chinese banks as they will be able to clear bad debts off their balance sheets and free up their regulatory capital.

However, there are also associated risks to securitization given that it played a major role in the lead up to the 2008 global financial crisis. There are already fault cracks beginning to appear in China’s financial landscape. A case in point is the securitized bridge in Inner Mongolia which could not collect enough tolls to pay investors (Shen and Ruwitch 2017). According to Shen and Ruwitch (2017), the rate at which the system is triumphing and the rapid business growth associated with i