Guangfa Bank sees its chairman, president resign as China Life assumes control
China Guangfa Bank announced the resignation of chairman Dong Jianyue and president Li Mingxian after insurance giant China Life assumed defacto control over the Guanghzou-based lender.
The departures came as Citi and China Life formally closed a deal that saw Citi sell a 20 per cent stake in Guangfa to China Life for 19.7 billion yuan. China Life now controls 43.7 per cent of Guangfa’s shares.
The two departing bank executives were believed to have been appointees of Citi. They both issued farewell letters to staff on their last day.
Zhang Fengming will serve as acting president until Guangfa secures regulatory approval for a new candidate.
While congratulating Guangfa staff on the bank’s achievements over his seven-year tenure, including expanding revenues and pre-provision operating profit by 3.6 and 6.5 times in that time, outgoing chairman Dong said he had many regrets, including not being able to help the bank achieve listed status.
“Because of limitations of objective conditions, Chinese-Western cultural differences and the limitation of my own abilities, there was some work that did not meet my expectation. There were gaps in many work areas, there were also many projects that were still ongoing, especially the IPO plan – that after great efforts on our part – did not succeed. I am very upset and regretful every time I get to think about them,” Dong said in his letter that was leaked by mainland media on Wednesday.
Citi’s spokesman in Hong Kong, James Griffiths, declined to comment on the content of Dong’s letter, including the alleged cultural discord, but said; “While we are proud of our decade-long partnership with China Guangfa Bank, this transaction is consistent with the simplification of Citi and allows us to focus our resources in China on growing our core franchise further.
“Citi has operated in China for more than a century, and it remains one of our highest-priority markets around the world. We employ more than 8,000 people in China and work closely with a targeted set of clients across both consumer and institutional banking,” Griffiths said.
In Dong’s letter, he told Guangfa staff that China Life chairman Yang Mingsheng and deputy chief Liu Jiade are due to join Guangfa’s board. In a statement, Guangfa said Liu has been nominated as vice chairman of the bank.
Dong said Yang is an experienced leader, and that the new board would be positioned to better lead Guangfa to a brighter future.
Yang was previously a president at Agricultural Bank of China until 2007, having worked there since 1980. For five years he was a deputy director-general at the China Insurance Regulatory Commission. He joined China Life in 2012.
Jiao Wenchao, insurance analyst at Ping An Securities, welcomed the closing of the China Life-Guangfa deal.
“The board already agreed on the candidate selection for the director appointments for Guangfa in August. The deal will bring China Life new synergy, both in clients and business. Even if China Life is still not completely fully controlling Guangfa there could be a window to up the stake if Guangfa Bank ever needs to raise funds in the future,” Jiao said.
In previous briefings with the media, Yang has said Guangfa would make a good channel for product distribution and client acquisition.
At the end of 2015 Guangfa had total assets of 1.84 trillion yuan. Guangfa’s other key shareholders are Citic Trust and Yingda International Holding Group, a subsidiary of the State Grid Corporation of China, which each control a 20 per cent stake in the bank.
China Life declined to comment when reached bythe South China Morning Post.