It all started in 1986 when Chen Muhua, governor of the People’s Bank of China, visited Shenzhen and was petitioned by officials from China Merchants Group (CMG) who suggested the government establish a commercial bank in the region.
A year later CMB was founded as the first shareholding commercial bank wholly owned by corporate interests. It had one office, 36 employees and about US$13 million in registered capital.
“CMB was born with a unique strategy – it had to develop along its own path,” said Tang Zhihong, the executive vice president responsible for retail banking at CMB. “We had no clear responsibility to central or local government. At the very beginning we were welcomed by foreign joint ventures and private companies in China because our position and development trend met those clients’ targets.”
This independence has also meant that CMB can’t rely on the state for financial backing. While billions of dollars has been injected into China’s banking sector to wipe out the non-performing loans (NPLs) that have arisen from poor lending policies, CMB must resolve its own problems.
“We have to write these off with our own profits so CMB pays attention to risk management,” said Tang. “Our development philosophy can be summarized as: innovation, services and prudent development.”