The Strength of Commercial Banks Depends on That of Its Board of Directors

2007-11-8

By Han Ruiyun, 21st CENTURY BUSINESS HERALD

“I would not tell you these things were it not for having purchased your stock right.”

　　Not long ago, a substantial shareholder, both a director, suggested to Dong Wenbiao, Chairman of the Board of China Minsheng Banking Corp. Ltd. that there was much room for CMBC’s card business to be improved with respect to its after-sale service and subsequent marketing. The suggestion by this director was so direct and sharp that Dong, for a short while, had nothing to say in reply. In fact, these two men have been keeping a harmonious relationship, but the director never talked about the aforesaid matters before that. If this director didn’t possess the stock right of CMBC and thus became its director, therefore making both parties a community with common interest, perhaps it’s impossible that these two men would have such chance to hold a dialogue.

　　This made Dong once more consider that, we should try to exploit positive potentials of its directors, especially to exploit those shareholders who are private enterprises –– Except those financial investors such as China Life, all shareholders of CMBC are exactly private investors. Fifteen months ago, when CMBC’s Board of Directors changed its personnel who had expired their term of office, and Dong Wenbiao just became its Chairman, rumors like disagreement among shareholders, connected transactions, etc. were bubbling with noise. But now, Dong speaks bluntly that its Board is “very harmonious” because CMBC’s future plan for making profits has been brought into view before each shareholder.

　　Someone said that Dong is both a Chinese banker who knows best marketized operations and a quite powerful one among those managers in joint-stock private enterprises. Surely, Dong has introduced a manner of marketized operations to corporation governance. For fifteen months after serving his office, Dong has been devoting his mind to three things: a five-year plan, corporation governance as well as how to fully exert the power of directors.

　　“The strength of a commercial bank depends on that of its Board of Directors ”, said Dong when interviewed by a reporter from 21st Century Business Herald on November 4. “I’m just a businessman with a duty to win biggest returns for my shareholders.” He added.

Open an oversea branch? I have no interest to do it.

21st Century: Last month, CMBC and UCBH reached a stock right purchase agreement. Through the first-stage investment of less than 10 million U. S. dollars, you managed to enter the United States, opening another channel for domestic banks to develop in U. S. In the future, will CMBC adopt foreign merger and acquisition as a strategy to implement? Do you think such strategy of foreign merger and acquisition is generally applicable to domestic banks?

Dong Wenbiao: International merger and acquisition (but not opening oversea branches) is more applicable to CMBC. In fact, we planned to purchase Hong Kong Asia Commercial Bank before that, when both parties almost finished the negotiation, a Malaysian bank intercepted and raised the purchase price, and thus we abandoned.

【Close this window】