ICBC news spokesperson announced today that ICBC would launch reform to its HQ organizational frame. According to the news spokesperson, ICBC HQ has been brewing the plans for restructuring since early of the last years. After intensive analysis and weighing the pros and cons, and through examination and approval by the board of directors, the plan is now ready for launch in June.
It is introduced that the ICBC HQ reform on the organizational frame extends mainly into three areas including corporate banking, financial treasury, and fund transactions. After the reform, ICBC will set up Corporate Banking Dept. I, Corporate Banking Dept. II, Settlement and Cash Management Dept., Credit Dept.
, Credit Approval Dept., Risk Management Dept., Asset/Liability Management Dept., Financial Accounting Dept., Operation Management Dept., and Financial Market Dept.. Meanwhile it will adjust functions of Institutional Banking Dept., Credit Management Dept., Investment Banking Dept., and International Banking Dept.
and cancel the former Corporate Banking Dept., Credit Evaluation Dept., Asset Risk Management Dept., Consumer Credit Management Dept., Treasury Operation Dept., Financial Planning Dept., and Accounting and Settlement Dept.
The change in ICBC organizational frame is conducted in line with the needs of customers, management, and the business process flow. After the reform, ICBC HQ will see a slight increase in the number of tier-one institutions, which grows from 31 to 34. However, through rationalization and integration, ICBC will cut 4 tier-two institutions. The personnel plan and the number of management people are fairly intact compared with pre-reform modules.
According to the observers, the move is another important manifestation of the further progress in ICBC's shareholding reform. In last year, ICBC underwent restructure and established the shareholding company and set up the corporate governance mechanism of general shareholder's meeting, board of directors, and Board of Supervisors. The reconstruction of the organizational frame at the banking management level aims to clarify the functions and specify authorities. It is a move perfecting the corporate governance and improving the organizational efficiency.
Obviously, the eminent feature of ICBC restructuring is the enhanced configuration for the sales and marketing function. Its intention for hierarchical and segmented marketing can be clearly discerned from such move. Taking the configuration of the corporate banking Department as an example, it builds four new Departments according to the different classes of customers and in response to their service needs.
In other words, Corporate Banking Dept. I is responsible for key account marketing; Corporate Banking Dept. II is responsible for the marketing to companies (except the key accounts) carrying the credit; the Settlement and Cash Management Dept. is responsible for non-credit corporate customer marketing, service, and the design/promotion for settlement products; the Institution Banking Dept.
is responsible for the marketing institution customers including financial institutions, government, military, intermediaries, and other non-corporate body organizations.
It is shown that the biggest bank in China does not stop the philosophy of "Customer First, Quality Service" at the ideological level, it is materializing the philosophy through its running of the organizational frame. The resources distribution as per the new layout for corporate marketing institution is on ground of target market segmentation and from the perspective of the customer needs so as to increase the degree of relevance in customer service.
Another feature therewith is the strengthening of risk control that reflects the idea of whole process, and comprehensive risk management. According to the thorough centralized risk management and the effective isolation between the front, mid and the back office services, ICBC took special care in setting up Risk Management Dept.
to cover the risk management of the entire bank. According to the credit management workflow, ICBC restructured its Credit Dept., Credit Approval Dept., and Credit Management Dept. The Credit Dept. is mainly responsible for the rating, credit, project evaluation, and security valuation; the Credit Approval Dept.
is mainly responsible for credit examination and approval; the Credit Management Dept. is mainly responsible for the bank-wide credit risk management, credit supervision and inspection, and sector/region analysis.
It is evident from the structure of ICBC Credit Department that its risk management is both centralized and segmented, which perfects the check-and-balance mechanism in risk management and marks the division between the banking risk management and the functional risk management.
ICBC's reform to the financial treasury Departments emphasizes on specialization and convergence that strive to find solutions for effective cost saving, improved risk control, and upgraded innovative abilities. ICBC sets up Asset/Liability Management Dept. during the restructuring to centralize the management of the entire bank's total volume of assets and liabilities as well as their structure, capital adequacy, liquidity, market risk, price, etc.
The purpose of the setup is to form a fairly flexible and responsive assets and liabilities management system, to strengthen the management and allocation of capital, and to build the capital allocation mechanism driven by value creation. Through setting up Financial Accounting Department., ICBC strives to consolidate the functions of financial accounting and management accounting, to establish a new financial management system to plan cost as a whole, to restrain risk and capital, in order to push forward the construction for scientific and reasonable incentive mechanism.
The Operation Management Department is responsible for the centralized formulation and organization of business accounting and banking operation procedures, and is responsible for the construction and liquidating bank-wide operation management system, parameter management, and other business processing tasks, thereby achieving the goal to construct the bank's unified business processing platform and banking operation management system.
In addition, another noteworthy point is that during the restructuring, ICBC aims at propelling the transition in service and returns through structural set up and functional adjustment. It especially consolidated the RMB fund transaction function in the former Treasury Operation Department and the foreign exchange transaction function of the International Banking Department into a new Financial Market Department in charging of operation and trade management for domestic and foreign currency investment and financing on domestic and international financial markets.
Therefore, ICBC has built a unified fund transaction platform capturing the domestic and the international market so as to more effectively and reasonably allocate and combine the domestic and foreign currency service resources and distribution, enhancing the domestic and foreign currency fund utilization rate and profitability.
The move bears significant interest for a bank of rich fund like ICBC. It is shown that ICBC's efforts in accelerating the banking structure transformation, commitment in financial service and fund transaction service development, and its push for diversified sources of incomes. This also suits the transition strategy for business model and growth method advocated and practiced by ICBC for a long time.
The ICBC news spokesperson indicated that the frame restructuring is both a response to ICBC's internal demand for sound corporate governance and it is a key measure to advance the business transition. He also stressed that the frame reconstruction is merely the manifestation through form of organization, yet the key lies in the reconfiguration of operation process to better serve the customers, control risks, and increase return.
It is also introduced that, after the completion of the frame restructuring at ICBC HQ level in June, its next step is to carry the corresponding adjustments to the branch institutions according to the HQ's frame restructuring. The ICBC news spokesperson stressed that the reform at the branch institution level emphasizes on the customized implementation with reference of the local market demand and actual circumstances, so there is no definite model for all. The HQ will not give mandatory orders as to the branch institutions' configurations.
