Bank heads back to the future

The winds of change that blew through Hongkong and Shanghai Banking Corp (HSBC) this week rose, appropriately enough, in the east. And when the dust settles in May, the bank that was established in Hong Kong and Shanghai in 1865, and has claimed a continuous presence on the mainland since then, will have its first Chinese boss at the helm. As HSBC and its global rivals funnel enormous resources into China, perhaps the world's most important growth market, it is impossible to overstate the significance of the bank's plan unveiled yesterday to install Mandarin-speaking, Hong Kong-born Vincent Cheng Hoi-chuen as its next chairman. Mr Cheng, 56, will succeed current chairman David Eldon, 59, who will step down after a 37-year career at the next annual general meeting of HSBC's London-based parent, HSBC Holdings, on May 24. Mr Eldon will leave to his successor a 19th century trade financier that spawned a global banking giant - now the world's second-largest by market capitalisation, and one that in recent years has returned to focus on its Chinese roots. A series of investments - in Ping An Insurance and Bank of Communications - has given HSBC a clear head start over its rivals in China. Under the leadership of Mr Eldon and president and chief executive Michael Smith, a mainland growth strategy has now been cemented firmly into place. That strategy is now likely to see Asia in general, and China in particular, playing a steadily increasing role in the global group's affairs. In the latest full-year accounts of HSBC Holdings, Hong Kong and the rest of Asia-Pacific contributed 40 per cent of group pretax profit - or US$5.11 billion of a total pretax profit of US$12.82 billion. In his new role as chairman, Mr Cheng, along with a reshuffled management team led by Mr Smith, will be looking to grow that contribution. A graduate of the Chinese University of Hong Kong, Mr Cheng's first big break came when he was promoted to the position of the bank's chief economist in 1986, an appointment that would eventually land him a job with the government and a brief spell away from the bank. It was from that point that his career took off. For two years from 1989 he was at the government's Central Policy Unit and serving as an adviser to then governor David Wilson, before he returned to HSBC, where he became chief financial officer in 1994 and general manager a year later. In 1998 came the controversial resignation of Alexander Au Siu-kee, his predecessor at Hang Seng Bank. Mr Cheng was brought in as acting chief executive under a flurry of speculation as to who would eventually replace him in a permanent role. Yet six months later his appointment was made permanent, leaving him the challenge of turning around a bank that had just been battered by the Asian financial crisis and that had unveiled its worst interim result in 10 years. Taking over from Mr Cheng as vice-chairman and chief executive of Hang Seng Bank will be Raymond Or Ching-fai. After more than 20 years with HSBC, Mr Or was finally appointed to assistant general manager in 1995, heading up the bank's corporate and institutional banking business. Then in 2000 he was named group general manager and has been acting as the bank's de facto spokesman in Hong Kong when Mr Eldon is not available. Also embraced into the new management team due to take over at HSBC early next year was Peter Wong Tung-shun. A prominent figure in Hong Kong's banking industry, Mr Wong's sudden departure from Standard Chartered Bank last month sparked intense speculation about his next port of call. In the announcement made yesterday that was cleared up, Mr Wong will be taking Mr Or's job, with expanded responsibility for overseeing the group's China operations as well. A computer science degree holder from Indiana University, Mr Wong joined Citibank's consumer banking unit as an assistant financial controller in 1980. In less than 10 years he climbed up the ranks and became director of sales, services and distribution channels for the group's north Asian operations. But it was at Standard Chartered, where Mr Wong joined in 1997 as head of consumer banking, that he has made his name. In 2000 he was appointed to head the bank's Hong Kong operation before having his job extended to cover Greater China two years later.