Economic Observer Online
June 11, 2012
By Hu Rongping (胡蓉萍)
Translated by Pang Lei
Original article: [Chinese]

The Economic Observer has learned that Tao Liming (陶礼明), president of Postal Savings Bank of China Co., Ltd. (中国邮政储蓄银行股份有限公司), has been taken away for questioning by authorities in relation to certain loans and transactions.

A reporter from the EO learned of the investigation from a number of people working in the banking industry.

When the EO contacted the Postal Savings Bank of China (PSBC) yesterday, an employee said that they had "not heard anything about the matter."

Mr. Tao has served as head of the bank since it was established in its current form in March 2007. Employees in various positions at the bank all decribed Mr. Tao as being "low key".

China's National Audit Office (NAO) concluded an audit of the China Postal Savings Bank's 2010 operations at the end of 2011. At the time, the EO reported that the NAO noted a number of problems with corporate management at the bank.

At the end of 2011, the EO reported that the state-owned bank, which is a wholly owned unit of China Post Group, received permission to reorganize as a shareholding company.

PSBC is a commercial retail bank that was founded almost five years ago as part of reforms that saw business operations hived off from China's postal regulator.

When it was first established, the PSBC committed itself to providing services to both urban and rural areas, to supporting agriculture and also to paying attention to providing financial services to small and very small businesses. The bank is often referred to as "China's Wells Fargo," due to the fact that, like the American bank, it also specializes in providing small loans to rural customers.

The bank has more branches than any other bank in the country. It operates under the control of the China Post Group Corporation which in turn is administered by the Ministry of Finance.

By the end of 2010, the bank had 544.3 billion yuan worth of various loans on its books, while deposits at the banks had increased by almost 25 percent on the previous year to 3.26 trillion yuan.

In 2010, the bank made 11.4 billion in net profits and possessed assets of over 3.3 trillion yuan. To provide a comparison, China's Bank of Communications, often considered China's 5th largest bank after the "Big Four," had assets of 3.9 trillion and made profits of 39 billion over the same period. A smaller bank like China Merchants Bank with assets of only 2.4 trillion yuan, was able to make 25.7 billion in net profits that year. As of March 2010, China's largest bank by profit and market capitalization (ICBC) had assets of RMB 12.55 trillion.

The PSBC had total assets of more than 4 trillion yuan as of the end of 2011.