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ICBC Chairman Jiang Jianqing

Finding a Cross-strait Strategy for Financial Services

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Finding a Cross-strait Strategy for Financial Services

Source:CW

With Jiang Jianqing at the helm, the International and Commercial Bank of China (ICBC) became the world’s biggest bank in terms of market value and assets. How did Jiang, who started out as an ordinary bank teller, make it to the top of this financial giant?

Finding a Cross-strait Strategy for Financial Services

By Yi-shan Chen
From CommonWealth Magazine (vol. 438 )

In the midst of the 2008 financial tsunami as stricken banks around the globe begged for government support, he went on a shopping spree, buying up banks in Hong Kong, Indonesia and Thailand. And once Taiwan and China have signed a proposed economic cooperation framework agreement (ECFA), his bank will most likely be the first Chinese bank to take a stake in a Taiwanese financial holding company. Who is this daring banker?

When CommonWealth Magazine held an exclusive interview with ICBC Chairman Jiang Jianqing earlier this year, a few things stood out.  

Jiang's rather dark complexion and tall build makes him appear to be from northern China, but in fact, he is a Shanghai native.

Yet he does not speak in the often grandiose and arrogant manner of northerners. Instead, he proceeds with the steady speed of a marathon runner in recounting how ICBC managed to evolve from a de facto bankrupt bank into the world's biggest bank with a bad loan ratio of under 3%.

As Jiang explains this astounding turnaround during the one-hour interview his facial expression does not reveal any triumph or exaltation. Despite his success, Jiang is quite serious and prefers to keep a low profile. "I don't think that now that we have become the world's biggest bank, we have reached the finish line. The marathon is still on,"Jiang says in explaining his cautious attitude.

When Jiang last visited Taiwan in late 2001, he had been promoted to ICBC chairman just a year earlier. Back then, the bank had not yet listed on the Hong Kong and Shanghai stock exchanges and it was saddled with non-performing loans.

Eight years later, Jiang will share his views on cross-strait financial prospects at the upcoming CommonWealth Economic Forum in Taipei on Jan. 19 in a discussion with Financial Supervisory Commission (FSC) Vice Chairwoman Lee Jih-chu and Chinatrust Financial Holding Vice Chairman Charles L.F. Lo, the pioneer of the credit card business in Taiwan.

Throughout his career the 56-year-old Jiang has posted many records. In 2000, he became the youngest bank boss in China's history when assuming the chairman's post at age 47. Nine years later, Jiang still holds his top post, having served longer than any other top executive at one of China's four large state-owned banks.

A Strong-Willed Personality Steeled by the Cultural Revolution

Jiang does not hail from an illustrious family. His parents were ordinary workers in state-owned enterprises. When Jiang graduated from senior high school, the Cultural Revolution erupted in China. Instead of attending university, Jiang was sent to the countryside like millions of other educated urban youth to help farmers in Jiangxi Province.

Following his stint as a farmer, Jiang toiled in a coal mine in Henan for three years. He once told the media that this period of hardship shaped his determined personality.

After the Cultural Revolution, Jiang returned to Shanghai, where he was assigned to count cash at the Xuhui Branch of ICBC. Attending university while continuing to work at the bank, Jiang graduated from Shanghai University of Finance and Economics in 1984. Subsequently, he obtained his master's and doctor's degrees from Shanghai Jiao Tong University.

Various analysts point out that Jiang's steady rise was due to the political clout of the so-called Shanghai Gang around former Chinese President Jiang Zemin and former Premier Zhu Rongji.

Yet Jiang continued to hold his top posts as ICBC president and chairman even after Jiang Zemin and Zhu retired from active political life. Last year, a rumor spread in Beijing's political circles that Jiang would join the cabinet as vice chairman of the National Development and Reform Commission. That Jiang's career keeps blossoming even as the Shanghai Gang's political influence has waned shows that he enjoys respect and esteem in his own right.

What are Jiang's hobbies? Somewhat embarrassed, Jiang reveals that he loves to buy and read books. But he buys so many even his wife complains.

While Jiang did not have an opportunity to study abroad in his youth, he did one year of advanced study at Columbia University in New York in 1995. He was deeply interested in how American banks use technology and even the Internet, and upon returning to China, Jiang wrote a book on the role technology plays in the banking industry.

Not Just Big But Full of Vigor

Jiang regards investment in high tech as crucially important and his bank's lifeblood. In the interview, Jiang spent considerable time explaining why ICBC has the largest high-tech R&D department of all banks in China and how all this financial high-tech helps headquarters to keep abreast of the daily settlement of accounts at thousands of ICBC branches across the country.

Thanks to such immediate monitoring, the bank's ratio of new non-performing loans – old bad loans were long ago transferred to an asset management company – has remained at just 1.7% for the past nine years. With the help of a high, government-guaranteed interest spread, these bad loans can be written off over the years.

But Jiang's eminent position in China's banking circles not only results from ICBC's unrivaled size but also from its vigor. Over the past two years the Jiang-led ICBC bought a controlling stake in Seng Heng Bank in Macao, which immediately made it the second largest bank in the former Portuguese enclave, and it acquired Halim Bank Indonesia in addition to getting a 20 percent stake in Standard Bank of South Africa, the biggest bank on the African continent.

In June this year, ICBC bought the Bank of East Asia (Canada) and in September it announced plans to acquire a stake in Thailand's ACL Bank. Furthermore, industry insiders confirm that ICBC is in talks with Cathay Financial Holdings to buy a stake in Taiwan's largest financial group and to launch joint cooperation in China, although details of the deal have yet to be hammered out.

"Overseas ICBC does not make financial, but strategic investments. We tend toward taking control and managing (acquisitions) ourselves,"says Jiang frankly in outlining his expansion strategy, and mergers and acquisitions are preferred because ICBC wants to position itself as a local bank in each of the countries it invests in as quickly as possible.

Translated from the Chinese by Susanne Ganz


ICBC Info 

Assets: NT$48.5 trillion (as of end of 2008)

Revenue: NT$1.5 trillion (2008)

After-tax profit: NT$560 billion (2008)

Number of employees: 420,000

Domestic bank branches: 16,252

Overseas bank branches: 134

Number of customers: 3.1 million corporate customers,190 million individual customers

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