Lord of the Links

My sojourn into the Spider's Web

Wednesday, September 14, 2005

The Great Bank Overhaul

Banking is bad business in China, and all of us know it! Banks have saddled themselves with huge loans which will probably not be paid back because they were shortsighted and unprofessional. One such bank is the Shenzhen Development Bank (SDB), which too has amassed huge NPAs and has an extremeley low capital adequacy ratio. It had to write off a large number of loans, and ended last year with an earning of $34m on total revenues of $1.08b.

Now, a private equity firm, Newbridge Capital group, which specializes in bank turnarounds, has bought a stake in it, and surprisingly the Chinese government has allowed them to introduce Frank Newman, the "banker of bankers", as the Chairman. Newman has a tough task ahead of him, since the bank doesn't have any IT systems worth writing home about, and individual branch manager regard their territories as fiefdoms.

However, he is trying to introduce some sane systems, such as a centralized credit analysis section, and trying to steer the bank into new business. If he is successful, it will start a clean up, which might just let China get over its biggest bane.
|| crawled by kpowerinfinity, 12:43 am

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