Our agency managers no longer have this authority

In December 2004, the Newbridge Capital American Investment Fund bought shareholders to State, for 149 million, 17.9 of the non-tradable of Shenzhen Development Bank shares, an establishment listed in based in Guangdong, but controlling branches in 18 cities across the country. General Electric should soon enter at 7 in the capital of the Bank. The bulk of the remaining shares being held by the public, the American investment firm became the largest shareholder and took effective control of the institution. Frank Newman, CEO of Shenzhen Development Bank, is the only foreigner to head a Chinese Bank. It is one of the rare Western experts living inside the revolution of the Chinese financial system.

Since December 11, foreign banks could theoretically offer their services in Yuan throughout the country. Do you expect an upheaval of banking landscape

Will take much time to see the effects of openness on the sector. Its impact will be very different according to foreign banks. If all are interested in the Chinese market and say want to develop there, very few actually have experience in the international retail banking and work with SMEs. HSBC, Citibank, or even BNP Paribas were able to develop projects in several countries. Others tempted by the Chinese market do not have this experience. I am convinced that most of the foreign competition will remain focused on the large companies who need more sophisticated products such as derivatives, that Chinese institutions do not necessarily always have. These are very special skills that it is difficult to develop from one day to the next day. However, succeed in retail banking, require much more time.

Are you worried your bank Shenzhen Development Bank

For us, the opening is not really a source of concern. Our activity is not primarily focused on large enterprises. We are more specialized in retail banking and services to medium-sized companies. What I explained to my troops, is that we must simply provide good products to our customers to ensure that they won't go see HSBC and Citibank. We, thus, already much developed our business credit cards in partnership with Wal-Mart and General Electric. In any event, the Chinese banking market is far from saturated. China's economy develops so quickly that there are places in the country for all banks, be they domestic or foreign.

Everyone said to want to develop the business credit cards. Are the Chinese ready for this service

It is a real issue. It is true that the Chinese do not like to be in debt. Many transactions, purchases are still cash in the country. This will yet gain maturity. I think that the business credit cards will become a profitable day in the country, but will not be one of the main sources of profit of the sector for many years. First, income of banks will be much more significant in wealth management, deposit and loan-housing activities. Middle-income customers already galvanized interest in our investment products. We are located in 18 Chinese cities and everywhere I see this activity soar.

Since two years, there has been a rush of foreigners to Chinese banks. Will their strategy be winning every time

All situations are different. Some of the investors in China's banks have for the moment previously won money the introduction on the stock market of China's banks in which they had taken positions. Catch of benefit is however still exist only on paper, since they must wait at least five years before selling their shares. For others, whose investment seem less financial and more strategic, it is more difficult to pronounce. China's economy is well, but many banks are in need of profound transformations and it is difficult to measure the influence of foreigners. There were sometimes only a seat on the Board of Directors.

We, when we launched our changing two years already, we have changed the Council. A Chinese experience we have added an international management. I am the only Western, but I was joined by Hong Kong and Taiwan bankers who brought their expertise. Together, we are able to make the changes, because we have a mandate strong. I am the CEO and the executives know that things should and will evolve. In the third quarter, we recorded an increase of more than 200 of our profits. Is that something must operate.

Is this mutation possible at all banks Is this really the end of the mountains of bad debt

I find that the Board of bank regulation increasingly sophisticated recommendations and encourages good change. The problem is the vast decentralization of power in the major Chinese banks. The authority is extremely dispersed. Branch directors have considerable freedom of action. Some are very good, others far less. And this poses a problem for the whole of the institution. To prevent this, we fully re-centralised our credit authorization. This was a major cultural upheaval. Our agency managers no longer have this authority. Everything is validated by us in Shenzhen sharp criteria. We have also centralized financial management, and auditing. We also want to consolidate the management of human resources. Agency directors remain responsible for the conduct of the business, but operate in a very controlled framework.

Your customers, often used to quickly agree with Agency principals, they responded well to this revolution

All this of course cost us customers initially. Agency directors were ready to validate requests for loans, but not our credit leader, who wanted more detailed collateral insurance on large projects. Some customers have refused or could not provide guarantees and therefore left the nearby Agency. This is not serious. I repeat my directors that we prefer that bad debts are among the competitors rather than us. There are enough projects in China not to be obliged to take all. You can say no and very good business. Ultimately, customers are happy to deal with professionals.