Citic Ka Wah profits from feminine touch

Industry veteran Doreen Chan has had a dramatic effect on the bank's mindset and, consequently, its financial health 'IT WAS BACK in 1980 that I was asked for the first time how I felt about being the only woman in a senior banking position in Hong Kong,' recalled Doreen Chan Hui Dor-lam, now president and chief executive of Citic Ka Wah Bank. Back then the question was prompted by her appointment to head Standard Chartered Bank's retail operations in the colony. 'My answer was that it was just a matter of time before more women would come up to the same level,' she said. But that was 25 years ago and a glance through the directors and senior managers of Hong Kong's top banks today reveals that the ratio of women to men in boardrooms is around three per hundred, and in senior management little better than that. And the further down the scale you go, into the city's smaller, family-owned institutions, the more like a conclave of cardinals (albeit in suits rather than robes) those executive meetings begin to look. 'Well. Give it a bit more time,' Ms Chan responded dryly, arresting the smile that formed as she made the remark. Her husband, who she disarmingly revealed 'loves her very much', advises her to look more stern during media appearances but, nonetheless, Ms Chan proceeded to cheerfully ignore his advice while her photograph was taken. It would be a mistake, however, to assume Ms Chan's human touch and the almost motherly demeanour that emerged during the interview betray a lack of steel. When she arrived at Citic Ka Wah in 1998, Ms Chan's task was to build up a virtually non-existent retail business. Within just four years, she was running the entire show as president and chief executive. The bank was bleeding red ink from bad loans made mainly to borrowers in China. She would not go so far as to say they were misguided policy-directed loans forced on management by its mainland parent but conceded she had to wrestle with a difference 'in mindset and culture' when it came to changing credit policy. Arriving as she did in the immediate aftermath of the Asian financial crisis, Ms Chan also had to take a cleaver to costs, closing branches and laying off staff. But rather than dwelling on such troubled times, she adroitly shifted the focus and said: 'The crisis situation also offered us an opportunity. That is always how things are.' A key quality of Ms Chan's successful leadership, it emerged, requires taking a half-full, rather than half-empty, view of an imperfect world. But the record does show that as the new boss of a local bank controlled by a China parent, Ms Chan conducted a mini-cultural revolution of her own, dramatically re-engineering the mindset she discovered when she arrived and with it the bank's business and the way it was conducted. The record also shows that her bold approach worked. The bank's 1999 results showed a $5.2 billion growth in its mortgage portfolio - adding, in just two years, new mortgage loans equivalent to 1.5 times the total home lending made during the 10 years that preceded Ms Chan's arrival. That growth came despite a deep chill that had descended over the industry. In the first year after her appointment, sector-wide lending fell 19.8 per cent - a devastating consequence of the Asian financial crisis of 1997-98. But under Mrs Chan's guidance as the new head of retail banking, Citic Ka Wah's loans grew by 29.6 per cent. The pattern was repeated in 1999, with another 15 per cent fall in industry-wide lending contrasting with a 9.3 per cent growth in the bank's loan book. A combination of bold lending decisions, aggressive write-downs of legacy loan losses and the winding-down of the bank's exposure to high-risk mainland borrowers ensured that despite this sharp growth in lending, the quality of the loan book sharply improved. By last year, helped by the acquisition of Hong Kong Chinese Bank, total assets had quadrupled since Mrs Chan arrived, from $20 billion to $80 billion. 'Bad' or non-performing loans were down from 8.46 per cent to 3.28 per cent - a big improvement, although that still leaves Citic Ka Wah's bad-loan ratio well above an industry average (excluding HSBC) of 1.8 per cent. The impact of the new management and direction has been even more pronounced on the bottomline, with net profit up eightfold from $103 million, to $816 million and return on assets up from 0.3 per cent to 1.04 per cent last year. So what qualities did Ms Chan bring to the bank to help engineer this turnaround? 'To be a good leader you must be able to paint a picture of the future [and] bring people in the business from one mindset to another,' she said. 'Male or female, a leader can be strong in different areas and the important thing is to be aware, as an individual, what your own strengths and weaknesses are, and to build what you need around you.' Generally speaking, she added, a woman might also bring more 'heart' to a job, which may be a good thing. Up to a point. 'When [women] get into something, they give their soul to it,' Ms Chan said. 'They're very dedicated and have a lot of passion. So the balancing act is to ensure that the head is equally strong.' That is where men come in, often bringing with them a 'more rational and harder line'. But Ms Chan contended there was a little yin and yang in all of us and back home, as housewife and mother, she employs both heart and head in equal measure to manage the thorny problem of being a working mother. 'There were stages when I felt I should have done more for the family,' she said, referring not only to her supportive husband - who runs his own watch-making business in Guangzhou - but their two children, a son now aged 19 and studying at university in Britain, and a 16-year-old daughter at school in Hong Kong. When debating whether its matriarch should take up Citic Ka Wah's offer of an executive appointment in 1998, the Chan family cut a couple of deals. Mater Chan told the children it was their responsibility to take care of their health and to get decent results at school. 'If they failed in either area, I told them I would quit my job and come and look after them.' Pater Chan, in turn, told his wife he would support her and drop plans under discussion at the time to relocate the family to Vancouver - so long as she did not overwork and ruin her health. At work, Ms Chan wanted to differentiate Citic Ka Wah from other more or less comparable rivals. She was reluctant to mention names but was probably referring to peer ICBC (Asia), the only other 'red chip' (locally listed but mainland-owned) bank in Hong Kong excluding giant Bank of China (Hong Kong). 'We are not a foreign bank and not a local bank per se,' she said. 'We are a 'red chip' bank but we differentiate ourselves by pursuing best international practice in our management, our talents and our corporate governance - which I still see as a unique positioning.' She added by way of emphasis that she was the only locally appointed chief executive of a red-chip bank and pointed out that since her arrival, the bank's board had been transformed with appointments of internationally experienced bankers and advisers. Efficiency and profitability aside, the transformation is driven by wider strategic objectives. 'If you were a financial institution based in Europe, say, and you wanted to get into China, there would be several routes you could take - equity in a PRC bank, a partnership with some PRC financial institution,' Ms Chan said. 'But you would be dealing with a completely different culture. 'But today you have this bank [Citic Ka Wah] that is China-oriented in its 'DNA', yet in its thinking, perspectives and practices is international best practice. You will find people here that you can trust from a corporate governance standpoint. We are the people you can talk to,' she added with a warmth that seemed to hint at the possibility that such talks were eagerly anticipated. Might some already be under way? 'I didn't say that,' she said in quite the sharpest tone of the interview, and with just a hint of steel. Biography Doreen Chan Hui Dor-lam is director, president and chief executive of Citic Ka Wah Bank. She is also director, managing director and alternate chief executive of Citic International Financial Holdings, the listed holding company for Citic Ka Wah Bank and the Beijing-based Citic Group's international flagship. Additionally, Ms Chan is chairman of HKCB Finance and Ka Wah Credit, as well as director of China International Finance (Shenzhen). Ms Chan has more than 25 years of experience in the Hong Kong banking industry. Prior to her appointment as head of retail banking at Citic Ka Wah in 1998, she headed Standard Chartered Bank's retail banking unit in Hong Kong. In April 2002, she was appointed as managing director and chief executive of Hong Kong Chinese Bank, which was acquired by Citic Ka Wah. She became president and chief executive of Citic Ka Wah after the completion of the two banks' merger later that year. Ms Chan is a member of the Banking Advisory Committee, the Advisory Board and Investment Committee of the Export Credit Insurance Corp and the General Committee of the Federation of Hong Kong Industries. She is also a director of Haven of Hope Christian Service and Breakthrough Limited. Ms Chan is married and has two children.