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

2007-11-8

21st Century: What are carried out this year by the Connected Transaction Committee?

Dong Wenbiao: The Connected Transaction Committee of the Board of Directors plans to carry out the following work in 2007: Firstly, to amend and perfect the Management Methods of Connected Transactions; Secondly, to establish a data management system about the company's connected relations; Thirdly, to supervise and examine connected transactions and to evaluate the risk status of connected transactions; Fourthly, to organize the training of relevant regulations on connected transactions and to strengthen the exchange of information about connected transactions; Fifthly, to routinely examine and check significant connected transactions and to supervise and examine the information disclosure of connected transactions.

　　Seen from the actual operation, the work of committees focuses on the execution of systems and operation procedures on the basis of clear work division by systems, and has achieved relatively good results.

　　Therefore, after the completion of these three things: the Five-year Outline, corporation governance and special committees of the Board of Directors, the change of CMBC will be great. In particular, the Board shall by all means start to operate normally. The strength of a commercial institution depends on that of its Board of Directors. Last month’s purchase of UCBH by CMBC is a decision made by the Strategy Committee of the Board of Directors.

Interest margin shall only account for a small part of income.

21st Century: As we know, CMBC also has an advanced reform, but opinions on its foreground greatly vary. This is the reform of business departments and implementation of process bank. In your opinion, what conditions CMBC has possessed to implement the aforesaid reform?

Dong Wenbiao: When serving as the president, I had firmly resolved on carrying out this work. In the second half of 2005, we decided to quit the company business from our branches so as to intently conduct retail business on their platforms. It’s easy to say this, but it’s hard to do so. For this, I had been monitoring it in Guangzhou for more than one month, under great pressure. The reason is that, if business departments are established, many people may be allocated to conduct retail business, while practitioners in all Chinese banks have no idea about conducting retail business. However, CMBC did it, and what is important is that our business isn’t subject to any influence.

　　In April and May of this year, CMBC launched its second-stage reform: to quit the company business from its branches and to concentrate them on eight company financial industry departments in the headquarters. After this reform is completed this year and these departments operate for the next year, in the year after next, I assume that the results will appear and CMBC will be totally different from other banks. I can say affirmatively that CMBC will operate risks from interest margin, and this is a great change.

【Close this window】