Few Chinese know how far the country has come in the past 35 years better than Liu Mingkang. For much of the Cultural Revolution from 1966 to 1976, Liu was persecuted because he was the son of a law professor, and he was forced to toil as a peasant in rural Jiangsu Province. He taught himself English at night with the help of a shredded textbook he had pieced together. After a brief stint as a steelworker, Liu landed a job at Bank of China in 1979, when Deng Xiaoping ushered in his reform. He quickly rose in the ranks and even made time to earn an MBA at City University of London.
These days, as chairman of Bank of China, Liu is perhaps the most forceful advocate of the modernization of China's financial industry--and of its integration with capital markets in Hong Kong and beyond. Liu took the helm of China's second-biggest bank in 1999, and he has steered it through rough waters in the wake of a corruption scandal that embroiled his predecessor. He persuaded Premier Zhu Rongji to let him list shares of its 344-branch Hong Kong operation--which accounts for most of the bank's profits--on the Hong Kong Stock Exchange. Before he could do the initial public offering, Liu oversaw a tricky merger of 13 different banks and financial institutions that were under the bank's umbrella--a delicate exercise that involved intense negotiations with Hong Kong regulators. Liu figured the July, 2002, IPO would force the bank, long known for its secrecy and bloated bureaucracy, to become more transparent and to adopt international management standards. Before the listing, "we did not have responsibility or accountability," says Liu, 56. "It's a story of good governance."
Bank of China's example, Liu hopes, will inspire other banks to improve. Already, the Hong Kong affiliate has become a place where bright young financial talents from China are learning modern risk-management techniques that can be transferred to the mainland. A separate investment banking operation, Bank of China International, recently joined a Morgan Stanley-backed venture as the only foreign institution licensed to underwrite international stocks and bonds in China. Because it must now answer to foreign capital markets, Liu also hopes Bank of China will be better able to resist government pressure to lend to politically favored companies.
Liu maintains that standards are improving. "China is changing very fast," he says. It will be up to determined executives such as Liu, equally at ease in the inner circles of Beijing and tony Hong Kong office suites, to build the sophisticated financial sector that Greater China needs. By Mark L. Clifford in Hong Kong