By Wen Xiu
BEIJING ( Caixin Online ) — The latest executive shuffle affecting state-owned banks has highlighted what some analysts say is the Chinese government’s commitment to maintaining strong lines of communication between banks and financial regulators.
It’s also exposed seldom-heard but serious concerns about a personnel appointment system that some argue overlooks market principles and limits the field for big bank and regulatory chiefs to an elite few.
Named in late November by China Construction Bank (CCB), the nation’s second-largest bank, and Agricultural Bank of China (ABC), the third-largest, were new top executives transferred from the ranks of government policy makers. Each was assigned a dual role as bank chairman and Communist Party secretary.
CCB /zigman2/quotes/208058581/delayed CN:601939 -0.81% /zigman2/quotes/209484779/delayed CICHF +0.77% /zigman2/quotes/208974133/delayed HK:939 -1.18% filled the post with 57-year-old Wang Hongzhan, who had served as a People’s Bank of China deputy governor and party secretary at the central bank’s discipline inspection commission.
At the same time, ABC /zigman2/quotes/204629388/delayed CN:601288 -0.63% /zigman2/quotes/209398792/delayed ACGBF -3.11% /zigman2/quotes/204629388/delayed CN:601288 -0.63% hired away 54-year-old Jiang Chaoliang from a job as president at the policy-oriented China Development Bank (CDB).
The announcements came about a month after CCB’s former chairman and party chief Guo Shuqing and ABC’s ex-chairman and party chief Xiang Junbo were respectively transferred to head the China Securities Regulatory Commission, which oversees the nation’s stock markets, and the China Insurance Regulatory Commission.
In a related personnel shift, a source told Caixin, ABC Vice President Zhu Hongbo has been tapped for a new job as a vice president at CCB.
Wang is known in financial circles for taking a holistic approach to economic decision-making. He’s also said to have a keen understanding of bank services.
Before working for the central bank, Wang served in multiple roles for years at the nation’s largest bank, Industrial & Commercial Bank of China (ICBC) /zigman2/quotes/202525815/delayed CN:601398 -0.61% . /zigman2/quotes/204265987/delayed IDCBF +2.94% /zigman2/quotes/201401473/delayed HK:1398 -1.48%
Similarly, Jiang knows the ropes at state-owned banks. He joined CDB after serving as chairman at Bank of Communication /zigman2/quotes/207155262/delayed CN:601328 -0.44% /zigman2/quotes/208048873/delayed BKFCF -7.41% /zigman2/quotes/203442771/delayed HK:3328 -4.19% between 2004 and 2008. In the 1990s, he worked at ABC as well as the central bank. And he served as Hubei Province’s deputy governor between 2002 and 2004.
Under Jiang’s leadership, BoCom cultivated positive relations with the Hong Kong bank HSBC /zigman2/quotes/202687335/delayed HK:5 -2.60% . As a result, unlike other foreign investors who’ve sold stakes in major Chinese state-owned banks in recent months, HSBC has held its BoCom shares.
Despite Jiang’s and similar success stories among the new bank and regulatory leaders, though, some critics have questioned the wisdom of what they see as a revolving door for executives routinely transferred by the Communist Party from bank to bank to high government position to regulatory agency.
They fault the system for restricting the number of executives put in charge of the nation’s most important banks and related watchdogs.
Moreover, overseas investors in Chinese banks have expressed concerns about the way party authorities ultimately choose each top executive at every state banks. Many have for years urged a more market-oriented personnel system, but the party has refused to change.
This monopoly on staff appointments lets a party committee at each bank single-handedly choose the very highest personnel.
In what party officials consider a compromise designed to appease critics, state-owned bank shareholders have been allowed to meet and cast votes for or against management nominees favored by Communist authorities.