Giving Credit Where Credit Is Due in China
BEIJING -- When Chen Yuan took over the China Development Bank six years ago, it had a pile of bad loans and a reputation as a yes-man for government-backed projects seeking handouts. It had burned through most of its start-up capital, and even some of its quality borrowers weren't repaying loans.
Today, Mr. Chen's state-owned bank has the lowest percentage of bad loans of all of China's banks -- less than 2% at the end of 2003, compared with 33% in 1998, the year he became its governor. It turns a healthy profit, with assets totaling $154.7 billion as of the end of last year.
"Many financial indices of China Development Bank are obviously better than those of its domestic and international rivals," PricewaterhouseCoopers said in an audit last year, parts of which the bank made available. "Your bank's money-making efficiency is among that of the top banks."
To turn things around, Mr. Chen weathered tirades from rejected loan applicants, outmaneuvered persistent influence-peddlers and persuaded employees that their main duty wasn't simply dishing out money. As China embarks on an ambitious campaign to overhaul a banking sector riddled with bad debt, Mr. Chen's story offers lessons to other Chinese banks as Beijing prepares to fully open its market to foreign banks in 2006.
"Mr. Chen has done an amazing job, transforming a sleepy, bureaucratic policy bank into an agile, forward-looking financial institution," says Fred Hu, a managing director at Goldman Sachs Group Inc. in Hong Kong. Mr. Chen and his team "seem to have put a real emphasis on upgrading internal controls, governance, product innovation and risk management, which are critically needed in all Chinese banks."
The son of Chen Yun, China's foremost central planner, Mr. Chen, 59 years old, won few fans with his aloof, cautious style during a decade working at China's central bank. That exterior hid a shy personality and strong faith in market methods, friends say. He wasted no time articulating his goals for the China Development Bank, set up four years earlier as the main financing source for the government's pet projects.
"I don't want to run a garbage bank," he told employees. "We are a bank, not just a source of funds, so we need to control our risks."
Unlike Western banks, which make decisions based on the bottom line, China's state-run banks traditionally have answered to the government, which pays bankers' salaries. The result: a banking sector with 20% to 40% of its loans gone bad.
The China Development Bank doesn't offer consumer-banking services, and when Mr. Chen took over, it employed only 1,000 workers, compared with several hundred thousand at each of China's four state-run commercial banks. Its overhead was much lower, but it didn't have enough local branches to keep tabs on all its far-flung borrowers. It had lots of authority from its government charter but also had a mandate to support developments no one else would touch, such as the controversial Three Gorges Dam, a massive hydroelectric and flood-control project.
Mr. Chen initially sought ideas from abroad, perusing piles of Western developmental agencies' reports and hiring foreign consultants, including Boston Consulting Group and KPMG LLP. But he decided that with China's economy in transition, he needed a hybrid approach -- employing Western risk-management techniques while encouraging the involvement of government agencies in projects he financed.
He focused on sectors with growth potential, including infrastructure and power, steering away from the overinvested steel and auto industries. He built up expertise in favored sectors to evaluate applications and assist borrowers. In 1999 he merged the China Development Bank with a small commercial bank, gaining 1,000 employees. Rather than getting into commercial banking, he used its nationwide network of branches to monitor loans.
Quickly dispelling the notion that his bank was a source of easy money, he shocked his staff and applicants by rejecting many applications.
The head of an electric-switch factory recently berated Mr. Chen at a public function for refusing to finance its production-line upgrade. "The factory's market share and the quality of its products were quite poor," Mr. Chen explains. The factory eventually secured loans elsewhere, but its development director, Huang Shuguang, says Mr. Chen's bank "should have supported us in that critical time, [because] we're such a large state-owned enterprise, and the bank is a state bank."
Mentioning Mao
Risk management wasn't always enough to justify his actions. When officials in the unprofitable coal industry complained that he wouldn't lend to them, Mr. Chen evoked Mao Zedong: "If such a great leader could be criticized for his errors, is the coal industry immune?"
Some customers appreciate his tactics. After commercial banks turned down Beijing Gonglian Co.'s loan application for an expressway, Mr. Chen's bank approved it only after the company agreed to cut extraneous expenses and slash its payroll. That "increased our efficiency a lot," says Sun Hongshan, Beijing Gonglian's chief accountant.
In a market economy or even in China's halfway system, banks and borrowers aren't keen on government intervention. Mr. Chen's bank, in contrast, often requires the involvement of local authorities before granting a loan, asking them to restructure inefficiently designed projects or to promise to help secure repayments.
"Getting the local government to play a market function -- that's the secret of success for China Development Bank," he says.
Before the bank lent 50 billion yuan (about $6 billion) for Tianjin's ambitious urban-renewal project, it asked the northern port city to merge three land-use agencies into one so that all land-use fees would go into one pot, which could serve as a guarantee against the loan. "On the one hand, we're discussing the project; on the other, we're discussing the [borrower's] management structure," says Liu Xihe of the bank's business-development department.
Weekend Plans
Loan applicants in China often try to bribe or otherwise influence bankers, so Mr. Chen shifted the loan decision-making authority from front-line staff to back offices. Some customers sought to influence these workers, too, so Mr. Chen set up a rotating committee to issue loan-approval recommendations each week -- sending out applications for review only on Fridays. Influence peddlers "don't work on weekends," explains Zheng Wenjie of the bank's project-appraisal department. The arrangement significantly curbed what he euphemistically calls applicants' "public-relations efforts."
The bank recently launched a program with small commercial banks to lend to smaller businesses, many privately owned, in 31 cities. That niche represents the Chinese economy's most dynamic growth engine, but it often has trouble securing loans. "We want to ease the bottleneck in the economy, which is the financial system," Mr. Chen says.
He envisions a bigger role for the China Development Bank, including credit cards and more investment-banking services, such as underwriting equity issues. Although he so far as been rebuffed by government regulators, he eventually wants to sell shares of his bank to the public.
国家开发银行向借款人说“不“
当陈元6年前接手中国国家开发银行(China Development Bank)时，该银行坏帐堆积如山，并以对政府支持项目言听计从而著称。这家银行当时已将大多数原始资金消耗怡尽，甚至连一些资产质量高的借款人都不偿还贷款。
今天，陈元的银行拥有中国所有银行当中最低的坏帐比例－－截至2003年年底不到2%，而他在1998年走马上任时的坏帐率高达33%。该银行盈利状况非常健康，其截至去年年底总资产为1,547亿美元。
普华永道(PricewaterhouseCoopers)在去年的一份审计报告中称，国家开发银行的许多金融指标明显强于国内银行和国际竞争对手。并认为该银行的赢利效率处于顶尖银行之列。国家开发银行公布了这份报告的一部分内容。
为了扭转乾坤，陈元顶住了来自那些贷款请求被拒绝的客户的严辞抨击、让说情人士知难而退、并使员工相信其主要职责不仅仅是把钱放出去那么简单。随著中国雄心勃勃对深受坏帐困扰的银行业展开变革，以及北京准备到2006年向外资银行全面开放其市场，陈元的故事为其它银行提供了一个教材。
高盛(Goldman Sachs)驻香港董事总经理胡祖六(Fred Hu)说，陈元做了一个了不起的工作，他将一个死气沉沉、官僚的政策性银行改造成为一个敏捷而有远见的金融机构。陈元和他的团队似乎真正的将重心放在了升级内部控制、监管、产品革新和风险管理上面，这些都是所有中国银行极其需要的。
陈元是中国前政府元老陈云的儿子。现年59岁的陈元在中国央行工作的10年期间保持著低调和谨慎的风格，这使他当时鲜为人知。朋友们说，掩盖在这一外表之下的是他缄默的性格和对市场秩序的坚信不移。他不遗余力的宣传著他对国家开发银行设计的目标，这家银行在成立之初的目的是为政府的重点项目提供资金支持。
他对员工说，我不希望管理一个垃圾银行。我们是一个银行，而不仅仅是资金源泉，因此我们需要控制风险。
与西方银行以利润为准绳不同，中国的国有银行传统上对政府负责，政府负责发放银行工作人员的工资。其结果是：中国银行体系的坏帐率高达20%-40%。
国家开发银行不提供消费者银行服务，当陈元接手时，该银行只雇佣了1,000名员工，与中国四大国有银行各自拥有数十万名员工相比相形见绌。它的日常支出远远低于其他银行，但是它没有足够多的分支机构对分散在各处的借贷者进行监督。它拥有很多政府特许权力，但同时它还被委任支持其它任何银行都无法涉及的发展项目，比如存在争议的水利发电和防洪工程三峡大坝。
陈元最初从国外寻找一些想法，他得到了西方发展机构的大量报告并雇佣了包括波士顿咨询公司(Boston Consulting Group)和毕马威(KPMG LLP)在内的外国顾问。但是他认为，由于中国经济正处于转型期，他需要一种混合的方法－－既使用西方的风险管理技巧，又鼓励政府机构参与他融资的项目。
他重点关注基础设施和电力等具有增长潜力的领域，避开投资过度的钢铁和汽车工业。他在侧重的领域建立专业体系，评估贷款申请并为借款人提供协助。在1999年，他将国家开发银行和一家小型商业银行合并，增加了1,000名员工。该银行在全国的分支网络并不涉足商业贷款业务，而是被用来监督贷款。
陈元很快就扫除了人们对国家开发银行是一个放贷机器的观念，他否决了多笔贷款申请，令他的员工和贷款申请人感到震惊。
一个电子开关工厂的主管最近在一个公开场合指责陈元拒绝为其生产线的升级提供融资。陈元对此解释道，这家工厂的市场占有率和产品质量都很差。这家工厂最终从别处获得了贷款，但是其发展部总监黄舒光（Huang Shuguang，音译）称，陈元的银行应该在那个危急的时候支持我们，（因为）我们是一家大型国有企业，而它是一家国有银行。
风险管理并不总是能足以证明陈元的举动的正确性。当亏损的煤炭行业的官员抱怨，陈元不愿意贷款给他们时，陈元提及了毛泽东，他说连这样一位伟人都可以因犯错误被批评，难道煤炭行业就不能吗？
一些客户对他的策略表示赞赏。在商业银行拒绝了北京公联公司(Beijing Gonglian Co.)对一个高速公路项目的贷款申请后，陈元的银行在该公司同意削减无关支出并裁员之后批准了贷款。北京公联公司的首席会计师孙红杉(Sun Hongshan，音译)说，这大大提高了我们的效率。
在市场经济中，甚至在中国尚在发展中的经济体系中，银行和借款人对政府干预并不热心。但是，陈元的银行在发放一笔贷款之前则常常要求当地政府介入，要求它们重组低效的项目，或要求它们承诺确保贷款的偿还。
他说，让当地政府发挥市场的职能，这是国家开发银行的成功的一个秘诀。
在该银行向天津雄心勃勃的城区改造项目发放人民币500亿元（60.4亿美元）贷款之前，它要求这个北方的港口城市将三个土地使用部门合为一个，以使所有土地使用费用统一到一个部门，从而对贷款起到担保作用。该银行业务发展部门的刘西何(Liu Xihe，音译）说，“一方面，我们在讨论这个项目，另外一方面，我们讨论'借款人'的管理架构。”
中国的贷款申请人常常试图贿赂或影响银行工作人员，因此陈元将贷款决定权力从一线员工手中转移到内勤。由于一些客户也试图影响这些员工，陈元设立了一个轮值委员会每周颁布贷款核准推荐－－只在周五将贷款申请拿出来进行审核。该银行项目评估部门的郑文杰(Zheng Wenjie，音译）说，说情的人不会在周六上班。这种安排有力的抑制了申请人所谓的“公关努力“。
这家银行最近在31个城市与一些小型商业银行实行了一个向小型企业放贷的计划，这些小型企业很多为私人企业。这些企业是中国经济最具有活力的增长引擎，但是它们在获得贷款时常常面临困难。陈元说，我们希望能放松卡住经济的瓶颈，即金融体系。
他预计国家开发银行将发挥更大的作用，包括信用卡以及诸如承销股票发行等更多投资银行服务。尽管迄今为止政府监管者目前仍未批准，但是他最终希望能够向公众出售其银行的股票。
