Over the past decade, Ma Weihua has grown China Merchants
Bank Co. into the nations sixth-largest lender in terms
of assets by introducing Western products like credit cards and
private banking to the vast Chinese market. Now he wants to
take on the world.
The financial crisis has left many Western banks bowed and
saddled with bad debts, providing a golden opportunity for
Chinese banks to expand abroad. And Ma, a former central bank
official who joined China Merchants as CEO in 1999, is not
hesitating to take the plunge.
China Merchants acquired Hong Kongs Wing Lung Bank
last year, its first major overseas deal. The $4.7 billion
price was a steep one, and China Merchants had to take an $85
million impairment charge on the bank last year, but Wing Lung
returned to profitability in 2009. This year, China Merchants
plans to establish a currency trading desk in its New York
branch, opened in 2008, and aims to upgrade its London
representative office into a branch.
The expansion move is a no-brainer for Ma. Although Chinese
companies are ramping up overseas investment, the
countrys banks have only 4 percent of their assets in
international markets. He realizes China Merchants has a long
way to go, and he is anything but triumphant about the way
Chinese banks have performed through the crisis. The banks are
like a child, he says; they didnt drown in the subprime
crisis because they hadnt yet learned to swim in global
markets. But in the future we have to learn to swim and
be involved in the international market, he explained in
a recent address to students at New York Universitys
Stern School of Business.
However quickly the bank expands abroad, though, the big
domestic market will remain the main engine of growth for China
Merchants. The banks pioneering credit card operation has
nearly one third of the Chinese market. Ma says his best
decision as CEO was to turn down an offer some years ago from
thenCitigroup CEO Sanford Weill to establish a credit
card joint venture in China. With 50 percent no one would
put their entire energy into it, he says.
The banks All-in-One credit card has become a status
symbol that is helping China Merchants go upmarket. To build
its customer base, the bank targets university graduates, who
are proving just as eager to buy on credit as their American
and European counterparts. Roughly 40 percent of the
banks credit card profits come from overdraft fees.
Who overdraws? asks Ma. Its the young
people, the wealthy people. The same as in the Western
That formula hasnt worked so well for Western banks
lately. If Ma can turn credit card debt into consistent
profits, he will really have something to teach his rivals.
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