By Hu Rongping (胡蓉萍)
Issue 619, May 13, 2013
News, cover
Translated by Chi Yi
Original article: [Chinese]

Ma Weihua (马蔚华) stepped down from his position as president of China Merchants Bank on May 9 after serving a record 14 years in the position.

Since the former central bank official was appointed to the position, the financial institution has transformed itself from a small regional bank into a market leader among China's joint-stock banks with almost 100 branches around the country. The self-proclaimed "professional manager" (职业经理人) says that he has no regrets as he looks back over a career that involved both the highs and lows of Chinese banking.

Ma took over as president of China Merchants Bank (招商银行) in 1999 when China's banking industry was lurching from one crisis to another and many abroad were saying that the country's banking sector was technically bankrupt.

Before he took up the position at China Merchants, Ma led a team of central bank officials charged with closing down the inslovent Hainan Development Bank. He later said that this experience left a deep impression on him.

Ma took up his position at the bank under difficult circumstances. It was during the Asian Financial Crisis and the Chinese Central Bank had just ordered commercial banks to cease their offshore business. A run had also occurred on China Merchants Bank's Shenyang Branch.

"These two events gave me a better understanding of the risks associated with commercial banking. The difficulties I had in handling these problem were the root of my faith in the need to pursue steady development."

At the beginning of Ma's tenure, China Merchants Bank held no advantage at all. It didn't have the kind of scale, capital, network or influence as the large state banks while at the same time it could not compete with Citibank and HSBC in terms of brand, credibility, management and efficiency.

Internet Banking and Customer Service

Ma Weihua decided to make a name for the company by seeking to develop its internet banking services. At that time, all banks were in the same position in terms of internet banking. Smaller banks even had an advantage over their larger competitors in developing these kind of services.

Ma's goal was to, in the space of a year, associate the bank's brand with internet banking. So, when someone mentioned China Merchants, they would immediately think of online banking and when a customer thought about online banking, they'd think of China Merchants Bank.

In 2004 China Merchants Bank made its first strategic shift to focus on retail banking services catered towards wealthy individuals. At that time, Chinese banks still focused on business customers and the main source of their profits was from the spread between deposit and lending rates. Ma Weihua believed the personalized retail banking was the key to future profits.

Liu Mingkang (刘明康), the former chairman of the China Banking Regulatory Commission, told the EO what impressed him most about China Merchants Bank was the principle it put forward 10 years ago - "We are here just for you" (因您而变). Mr. Liu also said that China Merchants Bank led the way in terms of moving the industry away from primarily being concerned about "products" to being centered on the needs of customers.

The bank developmed a reputation for innovation, becoming the first to offer offshore services and large-scale credit card services.

After his first 5 years in the job, the banks profits surged and the percentage of non-performing loans on the books fell.

As the Great Financial Crisis rattled world markets, China Merchants Bank was riding high and Ma was at the top of its game. The bank reported a net profit of over 21 billion yuan in 2008, while the profits of its major competitors - China Minsheng Bank (民生银行) and Industrial Bank (兴业银行), were only 7.9 billion and 11.4 billion respectively.

China Merchants Bank's growth has since slowed from that peak and the company is now in the process of a second strategic shift which aims to improve management efficiency and cost-effectiveness.

When asked to rate his 14-year career at the head of the bank, Ma Weihua gave himself a "Pass" (及格).

The outgoing chairman said "If I could go back in time I would still make the same decisions. I have no regrets."

One of a Generation

The EO asked many people who work in China's banking industry for an evaluation of Ma's time at China Merchants Bank.

Some praised Ma for being a professional banker who wasn't too bureaucratic. Others said that his links to officials working at the People's Bank of China, the country's central bank, helped him to navigate the regulatory constraints placed on banks.

Another banking executive explained to the EO that Ma was one of a generation of bankers who worked during the transition from a planned to a market economy. This executive praised Ma for being one of the bankers who was able to make the transition rather quickly and quite smoothly.

Over the next few years, many of Ma Weihua's contemporaries are expected to retire. The achievement of this generation of bankers is closely tied to the policy of 'reform and opening up,' Liu Mingkang told the EO.

However, Ma's performance at the helm of China Merchants Bank is also connected to the special characteristics of that bank.

Founded in April 1987, China Merchants Bank was the first joint-stock commerciabank wholly owned by corporate legal entities. There is no central or local government connections to the bank and it has generally been able to operate with little political interference.

A New Generation Steps Up

Tian Huiyu (田惠宇), Ma's successor was born in the 1960s has a master's degree from Columbia University. Tian faces a very different world to the one that confronted Ma when he took the reins at the bank in 1999. Most people working in the industry that the EO spoke to believe that the challenges facing Tian are even greater than those that faced Ma.