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June 28, 2007
Citibank and the City of Wuhan: Struggling on the Banks of the Yangtse
The smoggy, foggy and utterly disheveled metropolis of Wuhan, on the Yangtse River in Hubei Province, bears the historical distinction of locus of the river trade. [See photo I took in Wuhan that gives you an idea of the Wuhan version of a sunny day.]
Prior to the establishment of the P.R.C., the river trade consisted primarily of opium, bibles, more opium, tea, automobiles shipped up from Shanghai, coal, bibles, weapons and opium.
Aside from its typical central-China, second-tier lack of aesthetic appeal, Wuhan natives are delightfully spirited – indeed, noted within China for their revolutionary fervor – and, in my experience, fast friends. But fighters to a man.
So when, at a public forum, Citibank announced its intention to set up a bank -- based in Wuhan but spanning the central region -- in which it would hold a 20% interest, the less-than-a-mile-away thunderclap of response was heard all the way to Shanghai.
Complicating matters somewhat was the fact that, in the early years of the last century, Citibank’s predecessor built a magnificent branch, lording over the docks, as a testament to its preeminence in Wuhan business circles. That building remains. I touched it myself, inducing a frisson of electricity as it grounded my historiographically-charged body. [See photo.]
That predecessor, the National City Bank of New York, subject of at least one recent book of national significance and numerous articles, is accused of the theft of imperial and nationalist China’s asset reserves. Among other financially rapacious crimes. Alleged criminal activity, of course. [I am a lawyer, after all.] Demand was made upon Citibank to pay up for the alleged [I repeat] acts of an institution that was not only dissolved decades ago, but its assets nationalized.
Nationalized. Don’t you just love the subtle fragrance of that perfumed euphemism?
Of far greater significance is the state of Chinese banking institutions, such as the unalterably poor condition of the so-called “city banks （城市商业银行）,” rogue kin to the disastrous city cooperatives（城市合作社）and credit collectives （信用社）, mismanaged by the municipal governments that own and barely run them. [Shanghai being an exception, but only by a hare’s tail.]
Fearing the competition Citibank presents as it moves inland by virtue of the timetable specified by the WTO accords – well, intending to move inland and encountering resistance every step of the way -- Hubei provincial banking administrators have spoken out. They don’t like the idea of a new bank, preferring a reorganization of their existing decrepit and debt-ridden system. Perhaps with the aide of a white knight like Citibank, although this remains unsaid.
But Hubei banking administrators are getting scant support, it appears from their own admission, from national banking regulators in Beijing, who haven’t even responded to their reorganization proposal. And Citibank looks to be favoring an end run up to Beijing for additional leverage on the province.
Read all about it! My rough translation of this recent article from 21世纪经济报 follows.
Prelude to a Yangtse River Bank: Citibank’s Ten Billion Yuan Trick
Relevant Applications Not Received by Hubei Banking Administration
People in the Hubei Provincial Banking Administration have disclosed that the reorganization of existing city business banks would be more practical than the establishment of a new bank.
June 23, a.m, on site at the “China Creates” display at the Wuhan Science and Technology Event Center, Citibank’s rather bland display board attracts the attention of event goers.
The Citibank banner, no more than 200 characters long, displays to all their intentions toward the Central region. The bank proposes to inject 10 billion RMB (approx. US$1.25 billion) to create a national stock-issuing bank – Yangtse River Bank, 20% of which will be held by Citibank. It is well known that Hubei has for a long time wanted to create a regional business bank, but the fact that a foreign bank has thrown out a proposal has astonished the financial world. Everyone involved has kept their reactions to a low undertone. Hubei Provincial Banking Administration officials tell reporters that there is nothing to this at present. Citibank China regional public relations executives refuse to comment. Two roads present themselves: integrate the city business banks or to reorganize them entirely. Each presents difficulties.
Citibank’s Proposal
Recent reports suggest that Citibank has already begun to set up a bank in Wuhan by the name of the Yangtse River Bank (or Yangtse River Development Bank). Moreover, Citibank Group’s international executive Vice-President has said in a speech that the Yangtse River Bank will attract 10 billion RMB in capital obtained from international, Chinese and local sources, of which 2 billion RMB will come from the Citibank Group and the American Brysam Global Partners.
On the afternoon of June 25, a reporter telephoned Mao Zhi-hua, manager of public relations for the China region, to ask about the organization of the Yangtse River Bank. Mao said he would not comment at this time.
A source disclosed that no application for the organization of the Yangtse River Bank has to date been received by the Hubei Provincial Banking Administration, and that the proposal was still only an idea. A spokesman from the largest business bank in Hubei province – Wuhan Business Bank -- said he had not heard about the organization of the Yangtse River Bank.
“Currently, there is nothing to this,” came the response on the afternoon of June 25 from the Hubei Provincial Banking Administration.
That spokesman said, “I think this issue should not be raised just now, because the People’s Congress and the Politburo have proposed similar ideas about the improvement of the Hubei banking system. In the past, the relevant departments looked into it and studied improvement of the financial system. But the financial system is a complex problem.”
The spokesman said that the establishment of new financial institutions was far more difficult than coming up with the idea to do so. From Citibank’s point of view, they can naturally express their own ideas on the subject, “ But this issue isn’t just about talking. Even though foreign banks think the Wuhan financial market is ripe for development, setting up a financial institution can lead to a series of problems, and whether the idea can be put into practice is awfully hard to say.”
Reorganization of the Old or Establishment of the New?
What differs in Citibank’s idea, in the eyes of local Wuhan scholars, is that the development of the Wuhan Business Bank would have stronger roots within the local region.
“Strengthening and expanding the Wuhan Business Bank, creating a stock-issuing bank that spans the region, is, I think, the most practical,” says Wuhan University Economic Study Center’s President, Ye Yong-gang.
Ye Yong-gang’s proposal is to first inject capital into the Wuhan Business Bank with a share issue, thereafter change the bank’s name, and finally to change the business model to operate regionally as a stock-issuing bank.
Song Qing-hua, professor at Southeast Financial Economy, Law and Politics University, Xinhua Finance and Insurance Study Center, believes that a regional stock-issuing bank with its main branch at Wuhan has two possibilities: reorganization or the establishment of a new bank.
Song Qing-hua tends toward reorganization. “China already has over 130 banks, not a few, and the crucial thing is to take these banks and create a real market presence, and to increase competitiveness. Since we’re talking about bank, it must have a certain size, and only in this way, can it create trust among people and be capable of meeting its competition.”
A spokesman for the Hubei Provincial Bank Administration said that the integration of the city business banks in Hubei would be more practicable than the establishment of a new bank. “We could take the Wuhan Business Bank and [those of other cities] and merge them.”
Wuhan Business Bank would naturally form the core. Established in the late 1990s, its registered capital is 568 million RMB, and the Wuhan City Economics Bureau holds 17.6%, as its largest shareholder.
“Creating a large Wuhan Business Bank would meet with very great obstacles, coming from those municipalities with their own city business banks,” says a source.
An administrator who knows Hubei finance says that the Hubei provincial government has wanted to merge and reorganize the city business banks and credit collectives, creating a big and strong “Yangtse River Development Bank.”
“But there’s some difficulty in doing this.”
The difficulty includes the fact that within Hubei, banks and credit collectives have developed unevenly, just as was the situation encountered when Jiangsu provincial banks were reorganized into the Jiangsu Bank. A source close to the Wuhan Business Bank disclosed that, in planning future development strategy, Wuhan Business Bank wanted to take off on its own and to launch an IPO. It was not willing to merge and reorganize with other banks in the province.
The Dream of a Regional Banking Center
During the “China Creates” event, Hubei Provincial Vice-Governor Li Chun Ming did not express an opinion as to Citibank’s plan.
Sources say that Citibank has raised the idea with Hubei provincial officials in the past. As to the establishment in Wuhan of a national stock-issuing bank, Hubei province and the city of Wuhan have many times submitted their applications to national administration, but have never received any response. “At this time, they purposefully maintain a low profile on this issue, and I guess they are worried that national administrators are taking a long time in the approval process.”
Wuhan has never stopped dreaming of the day when it would once again become a financial center. The most recent proposal for a regional bank was submitted at the 5th meeting of the 9th plenum of the 2007 Hubei Political Committee, when top officials suggested that “a regional development bank can only be established in Wuhan.”
Previously, at the 2004 national meetings, the former Wuhan City Political Committee Chairman Liu Shan-bi submitted a proposal in his capacity as a national official, entitled: “A proposal to speed up the development of a regional financial center, regarding establishment in Wuhan of the Hankow Development Bank,”
Liu Shan-bi believes that, a stock-issuing bank, rooted locally, serving the central region, and aiming at national service, is established in Wuhan, it would have a far reaching effect on curtailing the loss of capital away from the area, support the growth of the central region, stimulate production..etc. etc. etc.”
21世纪经济报道 2007-06-26 16:18:30
“长江银行”前奏：花旗百亿谋略
湖北银监局尚未接到有关申请
本报记者 聂春林 刘晓 实习记者 王传晓 武汉、上海报道
湖北省银监局相关人士表示，相比成立一家新的银行，整合湖北省现有的城市商业银行更为现实。
6月23日上午，武汉科技会展中心二楼“华创会”现场。花旗银行一块并不起眼的展板引起参展者关注。
花旗银行用不到200字的篇幅向外界展示了其向中部区域渗透的用心。该行建议，牵头引资100亿元，在武汉设立一家全国性股份制银行———长江银行，花旗有意持有20％股份。
湖北方面设立区域性商业银行的意图早已为外界知悉。但此次由一家外资行先抛出一纸建议书却令金融界人士颇觉诧异。
各方对此反应均非常低调。湖北银监局某人士告诉记者，此事目前还没有说法。而花旗中国区负责公共事务的人士也拒绝表态。
摆在湖北面前的有两条路：整合现有地方城市商业银行或者重新组建。无论哪种选择都一样艰难。
花旗的设想
近日有媒体报道称，美国花旗银行拟在武汉组建长江银行(或称“长江发展银行”)，目前已经进入筹建阶段，并援引花旗银行集团全球决策管理部高级副总裁刘恒中的讲话称，长江银行将从国际、国内、民间等引进战略投资资本100亿元，其中，从花旗集团、美国Brysam全球银行投资合伙公司等国际银行财团引进20亿元。
6月25日下午，记者致电该行中国区负责公共事务的毛志华，询问组建长江银行一事，毛表示暂不表态。
一位知情人士透露，关于组建长江银行的申请目前还没有报到湖北银监局，组建“长江银行”一事还停留在设想的层面。湖北省内最大的城商行———武汉商业银行一位人士告诉记者，没有听说组建长江银行一事。
“目前还没有说法。”6月25日下午，湖北银监局办公室相关负责人如是答复本报记者。
该负责人称：“我觉得现在不要提这个问题，因为关于银行的设置问题，有人大、政协代表就如何完善湖北省的金融体系提出过类似的建议，前期相关部门也进行了考察，研究如何完善金融布局。但金融布局是一个比较复杂的问题。”
该负责人表示金融机构的设置远比设想困难。如果站在花旗的角度，自然可以对此事发表自己的看法。“但这个事情不是说说的问题，虽然外资金融机构很看好武汉的金融发展环境，但设置一个金融机构将面临一系列的问题，想法能否付诸实施很难说。”
重组还是重建？
与花旗银行的设想不同，在武汉当地学者们眼中，在武汉商业银行的基础上发展区域性银行似乎更现实些。
“把武汉市商业银行做大做强，扩展成为跨区域的股份制商业银行，在我看来更为现实一些。”武汉大学经济学院副院长叶永刚表示。
叶永刚的方案是，首先将武汉商业银行增资扩股，然后更名，最终转型成为跨区域经营的股份制银行。
中南财经政法大学新华金融保险学院教授宋清华认为，总部设在武汉的区域性股份制银行，有两种组建方式：一是重组，二是新建。
宋清华更倾向于采取重组的方式。“中国已有130多家银行，银行的数量并不少，关键是要将这些银行塑造成真正的市场主体，提高他们的竞争力。既然是银行，就必须有一定的规模，只有这样，对内才可以取信于民，对外迎接竞争。”
湖北省银监局相关人士曾表示，相比成立一家新的银行，整合湖北省现有的城市商业银行更为现实。“可以把武汉市商业银行和宜昌、荆州、襄樊、十堰、孝感、黄冈、荆门等地城市商业银行合并。”
武汉商业银行理所当然成为重组的核心。该银行成立于上世纪90年代后期，注册资本为5.68亿元，其中武汉市财政局占17.6%，是最大的股东。
“做大武汉商业银行，遇到的最大的阻力，在于其他几个地级市的商业银行，一直得不到地方财政的放行。”知情人士告诉记者。
熟悉湖北金融的一位监管人士称，湖北省政府此前也想仿照徽商银行模式，进行省内城商行和信用社联合重组，组建“长江发展银行”(拟)，实现做大做强，“但是有些困难。”
而困难就包括湖北省内各城商行和城信社的发展不平衡，跟当初江苏省组建江苏银行遇到的情况一样。据一位接近武汉商业银行的人士称，在设计未来发展战略时，武汉商业银行更愿意单飞，并有上市的想法，而不愿意参与省内城商行的联合重组。
区域金融中心之梦
湖北省副省长李春明在“华创会”记者见面会上，对花旗银行的建议不置可否。
知情人士称，花旗银行这一设想应该与湖北省有关方面事先沟通过。在武汉设立全国性股份制银行的想法，湖北省、武汉市已多次向国家有关部门提出过申请，但一直未得到回复。“此次刻意保持低调，估计是担心国家有关部门审批手续较长。”
武汉从来没有停止过恢复昔日金融中心的梦想。
最近的一次设立区域金融中心提案，是在2007年湖北省政协九届五次会议上，民革湖北省委员会建议，“成立一家中部发展银行，总部设在武汉。”
此前的2004年全国两会上，武汉市原政协主席刘善壁以全国政协委员的身份提交了一份提案：“关于在武汉组建汉口发展银行，加快推动中部地区金融中心建设的建议。”
刘善壁认为，如果能在武汉新设立一家立足地方、服务中部、辐射全国的股份制银行，对改善中部地区资金外流，扶持中部地区企业发展壮大，促进中部崛起战略的实施，将产生深远的影响。
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