ICBC chairman: China Bank 'monopoly' should be broken

China`s bank "monopoly" should be broken up, Jiang Jianqing, Chairman of the country`s largest lender Industrial and Commercial Bank of China (ICBC) told CNBC, adding that a more "diversified and competitive" environment would help improve the efficiency and management of the whole industry.

"I totally agree with Premier Wen that we should break the monopoly," Jiang told CNBC`s Christine Tan on "Managing Asia". "In a healthy economy, you have to have sufficient competitiveness and anti-monopoly enforcement."

Earlier this month, Chinese Premier Wen Jiabao called the country`s big banks a monopoly that needed to be broken up in order to get money flowing to cash-strapped private firms.
China`s big four state-run banks, including ICBC, Bank of China, Agricultural Bank of China and China Construction Bank, maintain dominance over the entire financial services industry, in particular the country`s credit allocation process.

There have been calls by government officials recently for more reform in the financial system. Last month China`s central bank chief Zhou Xiaochuan called for banks to accelerate lending to smaller companies and broaden financing avenues for the small and medium enterprises (SMEs).

"I think the essence of Premier Wen`s comments is that he wants to see a healthier, more diversified and more multi-ownership financial system, so as to enhance the efficiency of the financial services. This is exactly what I wish could happen," he said.

While Jiang acknowledged the lack of competition in China`s banking sector, he also said that in other major economies 4 to 5 banks typically make up around 50 percent of total assets in the overall financial sector.

"More than 20 years ago, there were only 4 to 5 big banks in China, taking up 95 percent or more of the total assets book in the Chinese banking system. After more than 20 years of reforms, by the end of last year, the Four-Big Banks` only held 45 percent of total assets," he said. Copyright 2011 cnbc.com