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China: Bank of China's cultural revolution

The Bank of China aims to be a major international player by the year 2010. But it faces many challenges, not least of which is the transformation of a large proportion of its international profit - from Hong Kong - into domestic profit in less than 500 days. Sophie Roell reports on the bank's efforts to expand its areas of expertise, introduce tighter controls and achieve real independence.

Bank of China's 20-storey head office is almost the only tower block on Beijing's "Financial Street". So far, no other banks have moved there. The most prominent building is the Holiday Inn. In years to come this could turn out to be a booming financial district - or another failed government planning effort.

Fortunately, the Bank of China is familiar with the limitations of government planning and no stranger to the vagaries of Chinese history. As the bank looks ahead to the next century, it can boast that it at least survived most of the last one. Set up in Shanghai in 1912, the bank managed to weather the Communist takeover in 1949 and subsequent upheavals.

The key to its success - ironically, given its name - has been the large proportion of its assets kept outside China and its function as the country's foreign exchange bank. Even during the Cultural Revolution, when all banks within China were subsumed into the People's Bank, Bank of China managed to operate its branches abroad under its own name.

Today, as China's banks struggle to transform themselves from being the finance arms of government departments into modern commercialized entities, Bank of China's presence abroad has again served as a cornerstone.