Bloomberg Shanghai
As a young man during China’s Cultural Revolution, Jiang Jianqing was sent to the countryside to work as a farmer and a coal miner. This week, he arrives at the top of a Swiss mountain as chairman of the world’s most profitable bank and representative of the most populous nation.
The head of Industrial and Commercial Bank of China (ICBC) is the first Chinese banker to serve as a co-chairman of the annual meeting of the World Economic Forum. The recognition highlights the increasing prominence on the global stage of the country’s state-controlled banks, which have added as many assets over the past five years as are held by all US lenders combined.
“The growing importance of Chinese banks at Davos reflects the coming of age of the Chinese economy and banking sector,” Sandy Mehta, the chief executive of Value Investment Principals, said.
The 60-year-old Jiang wrote in the January issue of China Finance magazine: “Chinese banks are at a position that our global peers aspire to reach. Accompanying our giant size is enormous pressure.”
The pressure comes from mounting bad loans as China’s leaders promise to allow the market to drive that economy and a five-year credit boom fuelled by the country’s state-controlled lenders threatens to come to an end.
Under Jiang’s 13-year leadership, ICBC was transformed from an almost insolvent firm with borrowers behind in repaying about half of their loans into a lender with a delinquency ratio of less than 1 percent, official data show.
“Jiang is very professional and has good integrity,” Liu Mingkang, the former chairman of the China Banking Regulatory Commission, said in Davos yesterday. “He focuses on being a banker, instead of thinking about other career opportunities like some of his peers may have done. ICBC… has a culture of cautious management.”
ICBC, which owns 20 percent of South Africa’s Standard Bank, earned 238.5 billion yuan (R424bn) in 2012. JPMorgan Chase, the biggest US bank by assets, achieved a $21bn (R228bn) profit that year.
Jiang championed the use of technology to transform ICBC into a modern bank and built a nationwide credit system in the early 2000s to improve its lending transparency and reduce influence from local governments, said Keith Pogson, the senior partner of financial services in the Asia-Pacific region at Ernst & Young, which was ICBC’s auditor until 2012.
ICBC achieved average annual profit growth of 31 percent from 2006, when it listed, to 2012, faster than its three biggest domestic competitors. HSBC, the largest European bank, grew profit 15 percent annually during the period, while JPMorgan recorded 20 percent annual increases.
“The challenge now is how to maintain our core competitiveness and the status as a leading bank in the world,” Jiang said last year. “I am feeling a lot of pressure.”