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SCMP Reporter

There are few people in Hong Kong's financial sector as closely involved in the talks on the territory's sovereignty transfer as Huang Diyan , former regional chief executive of the Bank of China (BOC).

His involvement will have spanned nearly 20 years when China takes back control of Hong Kong next year.

In the late 1970s, he was invited as a senior banker familiar with Hong Kong's financial affairs to sit on a preparatory body set up by the Hong Kong and Macau Affairs Office to provide background material and advice for the negotiations that led to the signing of the Sino-British Joint Declaration in 1984.

Mr Huang's participation has not ended since. Although he stepped down as head of the BOC regional office in 1994, he remains a member of the Hong Kong Special Administrative Region Preparatory Committee, responsible for forming the territory's post-1997 government.

'I am very lucky to have been able to participate in the entire journey of Hong Kong's return,' he said.

Mr Huang, who joined the BOC in 1953 and has been in Hong Kong since 1983, was singled out for his familiarity with the territory in general and with the banking industry in particular.

His transfer to Hong Kong marked a period of rapid growth for China as well as the BOC, and gave him valuable insight into the operations of the two increasingly intertwined economies.

'Hong Kong was able to enjoy a stable and prosperous period of transition because of the economic opening and stable political environment of China,' Mr Huang said.

The BOC was a big beneficiary of this opening. The head office formally set up the Hong Kong and Macau Regional Office, its administrative arm, in Hong Kong in 1983 and the BOC Group (Hong Kong) was founded in the same year.

Mr Huang said: 'In terms of area and population, Hong Kong is nothing compared to China. Its importance and attractiveness lie in its economic dynamism - an international financial and trading hub.

'This status has been further strengthened in the past decade as a result of the quick expansion of China's economy. BOC business in Hong Kong and Macau expanded rapidly under the favourable conditions.' Today, there are 14 banks under the umbrella of the BOC Hong Kong and Macau Regional Office. The BOC Hong Kong and Macau operations are the bank's most profitable overseas operation.

By the end of last year, the BOC group had a total of 403 head offices and branches, 379 in Hong Kong. Total deposits rose 11.7 per cent to $560 billion and total lending 17.1 per cent to $310 billion, while trade financing grew 15.1 per cent and operating profit 21 per cent.

When Mr Huang was sent to Hong Kong in 1983, he set himself two targets: to improve the BOC's corporate image and strengthen the coherence of its staff.

Until the early 1980s, mainland-owned enterprises, reflecting the image at home, were seen as staid and uncompetitive and had staff who lived on China's 'iron rice bowl' cradle-to-grave welfare system.

'When I came to Hong Kong, the term Biao Shu ['Uncle'] was used to describe officials from mainland China, such as myself,' Mr Huang said. 'It is a derogatory term, although we are all Chinese, and China is the motherland of Hong Kong.

'We know it was a problem left by the extreme leftist movement in the 1960s and early 1970s. But the situation was different in the 1980s.' Mr Huang set a strategy for the BOC regional group by having it identified with the territory. With its roots in Hong Kong, the BOC regional office could serve Hong Kong and promote economic development between the territory and the mainland.

BOC Hong Kong then set out to boost its local profile by expanding its emphasis from traditional retail banking and currency remittance to include more local-orientated businesses, such as small-scale foreign currency deposits, property mortgages and stock trading.

Today, the BOC group has one of the most successful retail banking services in the territory. It was the first to set up a network linking the 13 sister banks in Hong Kong and to computerise its teller services, which cuts out the time-consuming procedure of filling in forms.

By the end of last year, the BOC group had taken a quarter of the total local deposits and set up arms in merchant banking, insurance, credit cards, stockbroking, property development and fund management.

Its performance under Mr Huang in the last decade helped the group to change its image.

Although it is a part of the state-owned BOC under the Chinese Government, that has not hampered its efforts to become a profitable regional bank in capitalist Hong Kong.

His priority was to build a solid foundation for the BOC group in Hong Kong and to improve its credibility.

'The firm and stable foundation that we have been building for years was successful in cushioning the impact of the financial restructuring in Hong Kong in the mid-1980s, including the stock market crash in 1987 and the BCCI collapse in 1991,' he said.

Another goal was to beef up the team of employees, with the emphasis on localisation and equality of opportunity.

 BOC's workforce was 20,000 at its peak, but it has been streamlined to about 18,000 since computerisation.

'We have no bias on promotions. Actually, most people in senior management of the 13 sister banks in Hong Kong are locals,' he said.

'We adopt the same promotion standards as other international banks, where the keys are ability and capability.' The BOC has been one of the three Hong Kong note-issuers since 1994. The other two are Hongkong Bank and Standard Chartered.

Mr Huang said issuing currency before 1997 was the result of an invitation by the Hong Kong Government to benefit Hong Kong's financial market.

'We [BOC] have no intention of replacing any counterparts as the leading bank in Hong Kong, either before or after 1997,' Mr Huang said.

'The relationship between us and Hongkong Bank or others is a co-operative and supportive one.' He said Hongkong Bank and Standard Chartered had made public statements of support for the BOC group when it faced a bank run after the Tiananmen crackdown in 1989.

'It was a storm to us,' he said. More than a million transactions were carried out every day that week and $8 billion was withdrawn in one day.

But the group weathered the crisis well as all demands for money were met without hesitation.

Mr Huang had been alerted a month earlier about a potential crisis and had built up cash reserves. Mr Huang said he would like to retire in China.

'Hong Kong may be a dynamic place with lots opportunities for business development, but it is certainly not for retirement.' 



Huang's hand in Hong Kong's journey