Jiajin Lyu, president of the Postal Savings Bank of China (PSBC), talks about the relationship between the bank and the postal group and how it helps them meet the financial needs of millions.
Global Finance: What are PSBC’s strengths in China in relation to retail banking?
Jiajin Lyu: PSBC is the youngest large commercial bank in China; we were founded just 10 years ago. We identified from the very beginning our strategic positioning as a retail bank serving communities, small and medium-size enterprises, and agriculture. Over the past decade, we have followed the development strategy of differentiation based on the needs of China’s economic and social development, embarked on a distinctive path of sustainable development and become a leading, large retail bank in China.
GF: PSBC sees itself as an “inclusive” bank. What does that mean?
Lyu: PSBC has adhered to the philosophy of inclusive finance through building a physical operation network. The development of inclusive finance is inseparable from the network of channels covering urban and rural areas, especially remote areas. Relying on its distinctive operating mode of proprietary outlets and agents, PSBC has established a deep physical network.
GF: How do the synergies between China Post Group and PSBC work?
Lyu: PSBC is backed by strong shareholders. China Post Group, the controlling shareholder, ranks 119th on the Fortune Global 500 list for 2017. It is a large state-owned enterprise that takes post, finance and logistics as core businesses and also owns insurance and securities licenses, integrating the flows of goods, cash and information. China Post Group provides a platform for PSBC to share resources and conduct win-win cooperation with the group’s other financial subsidiaries.
PSBC and China Post Group have experimented with various cooperation modes to provide a wide range of convenient services for customers. For example, the two sides launched a new mode to serve the agriculture sector. The group established a rural ecommerce service system based on small stores and provided relevant logistic services; store owners assist local farmers in conducting transactions through the rural ecommerce platform.
GF: How is the bank growing its technological capability?
Lyu: The bank has established an industry-leading large, distributed core business system. PSBC is among the first large commercial banks of China to adopt the core system based on an open platform, minicomputer cluster technology and a distributed framework. And the system features outstanding extension capacity and cost efficiency.
Since it was launched, the system shows a high level of stability and makes it easy to achieve Cloud transfer, which tallies with development trends in Internet finance and the direction of information-technology transformation in China’s banking industry. Based on this technology road map, the new-generation personal business system was put into operation in 2014. Currently, it handles an average of 80 million transactions per day and more than 110 million on peak days.
GF: What were the key elements to highlight in the bank’s IPO in 2016?
Lyu: The IPO was notable for its size: The bank issued a total of 12.4 billion shares and raised HK$59.15 billion (US$7.58 billion), making it the world’s largest IPO over the past two years and also the largest H share offering in Hong Kong in the past six years. Pricing came in at HK$4.8 per share, breaking the practice of large commercial banks going public in Hong Kong on a discounted basis; thus the issuance maintained and increased the value of state-owned assets.
It achieved a multifold coverage ratio and featured a structure involving various types of institutions, such as Chinese-funded and international institutions, and long-term funds and hedge funds. As to the Hong Kong public offering, the subscription totaled about HK$8.25 billion, with a coverage ratio of 2.6 times, equivalent to the scale of a medium-to-large-scale IPO.
This result demonstrated that PSBC’s development has won recognition from all sectors of society and also reflects the confidence of the international market in China’s economy.