View from the top of a state lender
He may appear quiet and mild mannered, but Zhang Jianguo, president of China Construction Bank, likes to give entertaining speeches - and takes great pride in his role at the helm of China's second-largest bank.
The 57-year-old began his banking career in 1982 after graduating from the Tianjin College of Finance and Economics.
He began as a loans officer at a People's Bank of China branch in Tianjin before moving on to the Industrial and Commercial Bank of China, where he served as deputy general manager of the lender's Tianjin branch and deputy general manager and general manager of the international banking department from 1984 to 2001.
In between, he earned a master's degree in economics in 1995.
Zhang moved to Bank of Communications in 2001 and became president of the bank in 2004, before leaving two years later to head CCB as president.
Like many bankers who have come under fire over the health of the mainland banking system, Zhang has had his fair share of scrutiny.
In 2005, when CCB was on a road show in San Francisco, an investor asked Zhang about the trustworthiness of mainland bankers, citing former CCB chairman Zhang Enzhao, who received a 15-year jail term for corruption. He was asked how he could align his own interests with the bank's when his salary was far lower than his Western counterparts.
Zhang answered by telling his translator not to speak and responding in English himself, citing the examples of Enron and Daiwa Bank's rogue trader to show that Chinese banks were not the only ones facing such problems.
'There are some corrupt people in China, and perhaps there are other senior staff that we do not know about who might have committed misconduct. But not every senior member in the financial industry is corrupt,' said Zhang.
And he said that throughout his 30-odd years in banking, even though he has earned a lot less than his Western counterparts, his purchasing power was strong since the cost of living is much cheaper in China. Zhang said that when he smokes he uses a lighter powered by a piezoelectric battery, which can be bought for just one yuan. But in the US, he would probably pay US$1 for a simple flint lighter.
'What's more, we are a state-controlled commercial bank. My country, shareholders and colleagues gave me this platform to work on, and I am very grateful. So I will be sure to align my personal interests with the bank's interests. There is little doubt about that,' he said.
Zhang talked to the South China Morning Post about his banking career and the future of the sector.
Some would say Chinese bankers have a tough job with two roles- managing the bank and helping to implement the country's macro policies. Is this perception outdated?
As a state-controlled commercial bank and corporation, of course we have to implement and carry out the country's macroeconomic and financial policies, and we have to follow the guidance and policy of related ministries and supervision agencies. Even though we have achieved a good set of results, we shouldn't forget that just a few years ago, we received the help of the whole country in our financial restructuring and reform. We cannot turn our heads away now. We have to perform the obligations of a state-controlled company. I do not think our two roles [as a commercial bank and a state-controlled company] are in conflict.
What differences do you see between your role as a banker and those of your Western counterparts?
A few years ago, I went to meet investors in New York. The local newspaper listed photos of the six heads of the three large listed state-controlled commercial banks in China, along with the bank's profits and our salary. I said (jokingly) this was the US press using Chinese bankers to teach the US bankers a lesson - after the subprime debt problem broke out into a financial crisis, a lot of the US banks were struggling, but their [the US bankers'] salaries still seemed astronomical compared to ours.
CCB has talked about overseas expansion for many years but how will it carry that out?
CCB has not been as aggressive as Bank of China or Industrial and Commercial Bank of China. It is not as big in scale in its overseas business compared to BOC. But we did set 'overseas expansion' as a strategically important target in 2006. And since then we have steadily and progressively carried out our plans. We have opened two to three overseas outlets every year and our overseas assets have also picked up in scale. This is because the entire bank has realised that China's economy is becoming ever more reliant on the global economy. Many of our retail and commercial clients have already stepped out of China. If we cannot provide an all-round service to these strategic partners and customers, we will lose our business and customers. That is why our overseas expansion is a long-term strategy that we will stick to. This year we are pushing for expansion in Moscow, Canada and Dubai.
Does this also mean you will be conducting more acquisitions and go into the retail business overseas?
After we bought Bank of America's business in Hong Kong, we were not able to fully capture the acquisition opportunities in the market. It does not mean the same will happen in the future. Our future overseas strategy is to mainly grow organically, but also capture good acquisition opportunities. We will use both channels to push forward our plans. 'Going overseas' is part of our strategy, but I do not think in the near term we will have the capacity to compete with local banks full-on. In the near future, we need to work better on merging into the local market, and trying to get some development opportunities, while we serve well our existing ones. We are willing to establish a retail presence in places that are suitable.
Premier Wen Jiabao has called for the end of the banking monopoly to appease anger about their fat profits - meaning Chinese lenders will likely go through many transitions. How will this impact your bank?
A lot of people criticise large banks for not providing a good service to small and micro enterprises. Actually our loans to small and micro enterprises take up a large proportion of our assets. A lot of people say the standards that state-controlled commercial banks place on small and micro enterprises are too high, especially in terms of interest rates. Based on our statistics, our absolute interest rate to small and micro enterprises is actually at 7.8 per cent, far less than interest rates offered through other channels outside the banking system.
A few years ago, banks underwent financial restructuring as required by the government. We also attracted strategic foreign investors and became publicly listed. We underwent a thorough reform. After completing this three-step reform, banks strived to solidify their operations, improve efficiency and attract talent. What was the purpose of all of this? To prevent Chinese banks returning to the 1990s, when people were saying that the state-controlled commercial banks were on the verge of technical bankruptcy and in debt.