GDB: Healing the Giant(1)

In the two years since Citigroup took a majority stake in the Guangdong Development Bank it has worked tirelessly to see the bank through the restructuring process.

The Economic Observer has learned that Citigroup recently finalized the roadmap by which to reform the bank, which indicates that the restructirng process will require three years to complete.

Changes at the bank include the gradual establishment of new senior management. On December 18, GDB's board of directors elected Li Ruohong as the chairman of the board and legal advisor and Michael Zink as the bank's director, among others.

Recently, GDB's net assets have reached 12.5 billion yuan, the core capital adequcy ratio has reached six percent, non-performing loans are down to five percent of total loans, and non-performing assets have fallen to four percent.

'Our bank will begin a new phase of development, as we aim to have GDB become an international, first-class financial institution that garners domestic and foreign respect. In order to accomplish this, we must utilize the best international practices and standards that are suitable forthe Chinese financial markets. We are devoted to creating a bank that places it's customers at the center, while controlling risks and staying innovative. We aim to have the most satisfied workers and clients in the industry,' says Li Ruohong.

At noon on December 20, GDB held a senior management meeting of more than 80 people in the five-story meeting hall of its central office. During the meeting, president Xin Maihao explained the restructuring plan as it would progress over the next five years.

According to the plan, GDB will pursue three main avenues of change: increase staff communication and foster talented personnel; strengthen the organizational structure, infrastructure, and internal control; and streamline and standardize operations.

Among them, the third aspect is the most wide-ranging. Beside changes to the banks infrastructure, it also includes cleaning up its balance sheet, optimizing fund management, and the widening of professional and retail services. To this end, GDB will expand retail services in branch offices, online, and as a securities broker.

To accomplish all of this, the bank has established a detailed five-year plan that sources say is split into three phases-- the first year, second and third year, and last two years.