Market Focus : Sheer Loyalty Keeps One Bank Afloat in China : Even after the Communist takeover, Xu Chunrong stayed on. He’s still on watch as international investors stream back.
“Spare no expense and dominate the Bund,” was London’s command for the Hongkong & Shanghai Bank Corp.’s new headquarters on this Chinese metropolis’ famous waterfront. The result was a majestic, domed monument to moneymaking in the 19th Century, anchoring a row of imposing European facades on the Huangpu River.
Since the Hongkong & Shanghai Bank opened its doors in China in 1865, the Xu family has been a part of it. Xu Chunrong, 81, is the third generation to work at what became known in Shanghai simply as “the bank.” His grandfather and father clerked there, and when Xu turned 18, he too joined the bank’s local ranks.
“It was very prestigious,” says Xu, adding mischievously, “And my father didn’t give me a choice.”
But Xu proved to be one the most loyal workers the bank has ever had. Like a Forrest Gump of finance, popping up at key historical moments, he has played a role for the bank in World War II, the 1949 Communist liberation, the tumultuous Cultural Revolution in the 1960s and the current transition to a market economy. As other foreign banks that fled the Bund during the last 50 years of upheaval trickle back to Shanghai, the bank can say--partly thanks to Xu--that it never left.
“The bank is my family. I couldn’t leave it,” Xu says.
Never married, he’s been living in a bank-supplied dormitory since he joined the firm. His white eyebrows frame his face like two quote marks, and his windbreaker is unzipped just enough to display his silver bank-logo tie.
“I just wish I had a child to continue the family’s work,” he says.
Though Hongkong & Shanghai Bank “donated” its grand headquarters to the Chinese government after the Communist takeover, Xu still clerks in a less imposing office nearby. In a mix of British-accented English and Shanghai dialect, he describes the recent flurry of international investors bringing their money back to the city, which is becoming the commercial center of old.
The bank has financed more than 2,000 projects in China, including the Nanpu and Yangpu bridges in Shanghai, power plants and aircraft. It provides foreign exchange loans and commercial banking services, but is still banned from doing local currency business because of Chinese government concern that domestic banks are not yet ready to compete with international giants. Now based in London, the bank, after all, is reputed to be the world’s most profitable.
But the business is still a far cry from its heyday, when the Shanghai part of its name was the most important.
In those years the self-described “Banker to Governments and Agent for China” employed hundreds of porters just to ferry silver from place to place, since all banking transactions were carried out by hand. It was a time when the institution quietly carried bankrupt British gentlemen through the Depression, when Chinese thought that rubbing the noses of the two bronze lions flanking the great doors would bring good luck--and that patting other parts would guarantee fertility.
The lions disappeared when the Japanese invaded China in 1937, and are thought to have been melted down for scrap. The bank’s European staff disappeared too, most interned as prisoners of war. The Japanese expropriated the bank and made it a branch of a Yokohama financial institution. Xu remembers when they marched into the building to take over.
“They came to seize all the assets, so I sat down and typed out a receipt,” he says. “I wanted to be able to show the manager where all the money went.”
While the bank was under Japanese control from 1942 to 1945, Xu paid the bank’s post office box and registration fees from his own pocket, to keep the name alive. “One hundred yuan,” he says--not a small sum in those days. He thinks he may still have the receipts.
China’s civil war followed the brief peace after World War II, and the victorious Communist government took the building for its party headquarters and municipal offices in 1955.
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As refugees and dispossessed industrialists from the mainland swarmed to Hong Kong and created a postwar boom, the banking business followed. Xu and a few employees maintained the Shanghai office, performing the occasional wire transfer from abroad.
Xu found he had become the caretaker of an anachronism, but worse was to come. In the 1966-76 Cultural Revolution, which targeted “capitalist roaders,” he feared for the bank--a foreign bastion of “imperialist exploitation”--the ultimate symbol of everything China’s masses were bent on destroying. But for some reason he says he can not explain, he and the bank were left alone.
“Some Red Guards came by once or twice and left some propaganda for me to read,” he said. “I read it. They didn’t bother me much after that.”
These days, Shanghai seems to be rumbling beneath decades of neglect, re-emerging as China makes its bold shift toward a market economy, and is avidly encouraging foreign investment. Some of the buildings on the Bund have been reclaimed by their original owners--at a price--and Xu would like nothing more than to see the inside of his old building again.
After 40 years of minimal maintenance, the cost to refurbish it would be high. The plumbing is old, the giant vaults once used to hold taels of silver are useless, and the basement is flooded, says one local real estate agent. Xu says the former tenants painted over his favorite mural in the great entry hall: eight panels depicting banking centers of East and West.
Shanghai’s urbane Mayor Xu Kuangdi--who is at the forefront of the city’s development, boasting that “Shanghai will rise again to be an economic center in the 21st Century”--occupied the head office in the bank building until June.
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But the Shanghai government recently moved into a fancy new tower near People’s Park and has put the bank building up for bid.
Hongkong & Shanghai Bank is first in line, though the government has calculated that the bank should pay at least $200 million in back taxes if it wants to reclaim the building. Ten other institutions are in the running, including the Shanghai Stock Exchange and several Chinese banks. Tenders are rumored to reach $400 million.
“We’re interested in buying the building for sentimental reasons, and it’s a good way of stating the importance of our China business,” says Robert Sherbin, the bank’s spokesman in Hong Kong. “But those numbers are ludicrously high.”
Xu Chunrong laughs when asked if he’s related to Mayor Xu and if he can use his connections to help get the bank back. At 81, he’s still going strong--even learning how to use the new computer system--but his colleagues suggest he just doesn’t want to quit before the bank returns to the Bund.
“He can’t do that, though he’s done practically everything else for the bank,” says Shanghai director Victor Sun. “But if we do get the building back, we’ll ask him to lead the parade.”
