Not every former coal miner and farmer dreams of taking on Citibank, but maybe they will after hearing the story of Jiang Jianqing.
Jiang’s name first appeared in the local press as a result of the Industrial and Commercial Bank of China’s (ICBC) purchase of a 20% stake in Standard Bank for R36,7-billion. This is not incidental; Jiang is ICBC’s president and chairman. But despite his power relatively little is known about him locally.
A quick glance at his CV suggests he boasts a prodigious work ethic.
At the age of 17 he was “sent down” to work in the fields of southern China for six years, according to Cheng Li’s article in the China Leadership Monitor. The year was 1970 and the Cultural Revolution was in full swing. Later he spent three years working in a coal mine before finally returning to Shanghai, his birthplace, in 1979.
Here he landed his first banking job, working as a clerk in a subsidiary of People’s Bank while earning his degree at night from the Shanghai Institute of Econo-mics and Finance.
His hard work paid off, because in 1986, at the age of 33, he was appointed a deputy director of ICBC’s Shanghai office. He was still studying, this time for a master’s degree in management engineering from Jiatong University.
Eventually he was appointed vice-president and then president of ICBC’s Pudong branch.
He earned his doctoral degree from Jiatong University in 1999, Cheng recounts, and that same year he became vice-chairman and executive vice-president of ICBC.
In 2000 he became chairperson and president of ICBC, then the tenth-largest bank in the world and the largest in China.
It controlled a quarter of the Chinese banking market, with 470 000 employees and 420-million customers. Jiang’s intention, he told reporters at the time, was to build a bank that could take on Citibank.
China enjoys dealing in superÂlatives, but ICBC appears to enjoy it even more. Although the sub-continent had seen several of the world’s largest initial public offerings (IPOs) — among them the $3-billion listing of China Life Insurance in New York and Hong Kong in 2003, and China Construction Bank’s $9-million listing in Hong Kong in 2005 — ICBC’s listing last year was the largest yet, at $22-billion, according to Fortune magazine.
It is now the world’s largest bank by market capitalisation, worth around $319-billion. Last year, according to its website, it served over 2,41-million corporate customers and 170-million retail customers through 16 997 local branches, 98 overseas branches and 1 326 agent banks around the world.
Previously a state-owned commercial bank, ICBC has now transformed itself into an international public shareholding corporation. Jiang’s vision appears to have succeeded, with ICBC dwarfing Citibank. Sceptics warn, however, that ICBC’s apparent strength is as a result of China’s overheated markets.
The links between politics and business may have become more relaxed in modern China, but they have not disappeared. Like many business leaders, Jiang is a member of the Communist Party and serves on its 16th Central Committee.
But even while Jiang’s banking career progressed in leaps and bounds, China’s banking system remained in its infancy.
Until December last year, banks offered only savings accounts to customers, said Heather Connon in an article in Observer last November.
Although credit cards were available, the article said, there were just 27-million cards in issue for a population of 1,3-billion: an average of one for every 50 people.
According to Connon, the Bank of China had a contract with the police to collect payments on loans. Bank staff visited the houses of potential customers to check that the borrowers actually existed.
“Indeed, there is little alternative in a market where credit-scoring techniques as we know them are virtually non-existent, the rules on property ownership are opaque at best and most bank employees are still trying to adapt to a world where commercial considerations, rather than the state, govern the conduct of business,” Connon wrote.
Despite reforms, the Chinese banking sector is plagued by bad debt. Previously the government was responsible for lending decisions and bankers behaved as though loans were underwritten by the state, Connon wrote. ICBC was not immune to this and one of Jiang’s priorities on taking over had been to get the company’s debt and nonperforming loans under control, according to BNET.com.
He told Business Week in 2001 that most of its nonperforming loans (NPL) had been transferred to another company and that 24-billion renminbi had been provided for bad loans. “I foresee that, after three to five years, the NPL problem for the bank will be solved to a large extent,” he said.
These days global expansion is more of a priority for Jiang. This was ICBC’s third overseas purchase in less than a year. It also bought almost 80% of Macao’s third largest bank, Seng Heng Bank, and bought Indonesia’s Bank Halim last year.
Jiang told China Daily that 71% of the bank’s overseas asset base and 87% of its aggregate profit overseas came from mergers and acquisitions. ICBC is now planning to open branches in the United States, Russia, Dubai and Qatar, CNN reported recently. It also said Xinhua had reported that ICBC was planning to take over a bank in Australia.
Even after making the largest foreign investment in South Africa to date, Jiang has plenty of cash left over from last year’s IPO.