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20 Years of the Industrial Bank: Writing a Legend in the Quest for Excellence

Twenty years ago in the small southeastern city of Fuzhou, a group of entrepreneurs vowed to found a serious and dignified bank. Twenty years later, a national Bank that is influential in both domestic and foreign financial markets has toweringly stood. The brilliant age of the past twenty years has documented the incredible rise of the Industrial Bank.

From a Local Bank to a Listed Bank

The Industrial Bank was officially listed on the Shanghai Stock Exchange on February 5, 2007. It was the 8th bank to be listed in China's A-stock market. The Industrial Bank rewrote records for the scale of subscription capital and the offering price of bank shares in its initial public offering. People were surprised to discover that the Industrial Bank, which is often considered as being low-key, boasted this kind of performance, vigor and enormous potential.

Going public was a milestone in the Bank's history. It also changed the way that the Bank was perceived in the eyes of the public. People are becoming more aware of how the Industrial Bank has come to be as their attention is caught by the Bank.

The Industrial Bank's 20 year history can be divided into four different phases. It has gone from being a local bank to a regional bank, a nationwide bank and finally a listed bank.

Guided by instructions from the State Council, the Industrial Bank was founded on August 29, 1998 through the reorganization of China's first local state-owned financing organization, the Fujian Fuxing Financial Company. Based in the city of Fuzhou, the Bank was among the first commercial banks to emerge in China. At the time of its founding, the Bank was granted the status of a regional bank by the Government. However, for a long period of time following its founding, the Industrial Bank was unable to break out of Fujian Province, and was in reality a local bank.

In 1996, the Bank seized the opportunity provided by the relaxing of national financial policy to make a historic stride. It became the first bank of its kind to establish a presence in Shanghai. Following this, it expanded southwards to Shenzhen and eastwards to Changsha. Stepping outside of Fujian Province, the Industrial Bank had become a regional bank.

With the situation in China continuing to change, the Bank launched a resolute strategy in 2000 that would see it modernizing and going national. With this, the Bank's quest to operate on a nationwide scale began. The Bank had soon established a presence in most of China's major cities, including Beijing, Hangzhou, Guangzhou, Nanjing, Ningbo, Chongqing, Jinan, Wuhan, Shenyang, Tianjin, Chengdu, Zhengzhou, Sian, Taiyuan, Kunming, Nanchang, Hefei, Urumchi, Qingdao, Dalian, Nanning and Harbin. In March 2003, Industrial Bank became the first bank of its kind to realize the name change. The Industrial Bank changed its name from the Fujian Industrial Bank to the Industrial Bank. This move marked the Bank's establishment as a national bank.

In February 2007, the Industrial Bank made an initial public offering in the national A-stock market and successfully became a public bank.

From local to regional to national to public, the amazing development of the Industrial Bank has been characterized by leaps forward. In the period from the Bank's founding up until the present, its annual asset growth and loan balance growth have averaged at almost 40%, average annual growth rates for deposit balance and net capital have been 50% and 30% respectively. In a space of just twenty years, the Industrial Bank has made achievements the likes of which have rarely been seen in financial markets anywhere, be it China or abroad. In twenty years, the Bank's outlets have gone from 1 to 400, its employees from 68 to 12,000, its total assets from RMB 600 million to over 900 billion, its net capital from 300 million to 50 billion and its annual net profits from several million RMB to over 10 billion.

The latest rankings of the World's Top 1000 Banks published by The Banker puts the Industrial Bank in 124th place for total assets and 147th place for tier I capital. These rankings are 289 places and 421 places higher than those from the year 2000 respectively. This is yet another testament to the Bank's incredible growth legend.

The “Secret” Behind Rapid Growth

Existence is Logical. There is, of course, an inherent logic behind the success of the Industrial Bank. However, the Industrial Bank was born as a new kind of bank outside of the old system. It did not have the support of the government; it lacked strong backing and was also disadvantaged geographically. In consideration of this, people have often asked the questions “what has been the secret behind the Bank's success?” and “what drives on such rapid growth?”

Upon reflection, the essence behind twenty years of splendid success has been strategic planning with foresight, orientation to the market, quality services stars with sincerity, courage to innovate and probe into management systems and a spirit of enterprising and fighting for victory.

The bank has won praise for its ability to plan with foresight. The Bank's leading capacity in planning and implementation has played a major role in allowing it to grasp major opportunities for development again and again. The Bank has been able to accurately perceive changes in the internal and external environment, make strategies that have a high degree of foresight and ensure their sound and effective implementation. This has allowed the Bank to develop in leaps and bounds despite competition in the industry being extremely fierce. This is evident in the Bank's “3-step Strategy” that it made to lay down solid foundations for development shortly after its founding, the plan of “Start a New Undertaking”to achieve inter-regional operation, the goal of going national that was proposed in 2000, the introduction of strategic investor, the pro-active transformation of business development and profit modes in 2004 and the push to become listed.

Being oriented to the market is both a major characteristic of the bank and a source of its vitality. The Bank was born out of the reform of finance in China, its guise being a joint stock company. This meant that it had to struggle to survive in a competitive market from day one, and that respect for the laws of the market was the precondition for development. This actually made the Bank stronger, enhancing its ability to improve itself. For twenty years, the Bank has relied on market operation and its own resources for capital supplementation, the writing off of bad accounts and risk provisions. The Bank's status has been sound throughout this period. The Bank's ratio of non-performing loans at end of 2007 was a mere 1.15%, making it close to the international standard.

Even more important was that the Bank made bold innovations and breakthroughs in line with the trends of marketization. It was among the first Bank's in China to establish mechanisms for independent management, self-development and sole responsibility for its own profits and losses. It was also among the first to establish mechanisms for evaluation, resource allocation, employment and wage allocation that adhered to market laws. The advanced nature of the bank's systems and mechanisms made it highly attractive to talent and helped the Bank retain its vigor.

Quality services that start with sincerity have been fundamental to the Bank's development. Popular advertising slogans such as “Service starts with sincerity” and “Grow together, Develop together”, aptly portray the top services offered by the Industrial Bank. Ever since the day that it was founded, the Bank lay down a commitment to go against certain bad practices that were commonplace in China's service sector at the time, such as distance from clients and passiveness in service. The Bank led the way forward by offering pro-active services of a high quality.

The Industrial Bank has also remained committed to diversified development and product innovation. The Bank has launched a number of innovative products and services that have gone on to set new precedents in the industry, such as the issuing of subordinated debts and hybrid capital bonds, the bank-bank platform and energy-efficient loans. Furthermore, a number of brands launched by the Bank have been met with excellent responses in the market, such as “Natural Life”, “Wise Fortune”, “WHT” and “WHB”.

The bank's application of technology has increased rapidly. It was among the first banks in the country to realize the centralization of bank data, the establishment of backup systems for long-distant disasters as well as a series of self propriety production and management systems. In terms of services, the Industrial Bank offers internet banking, telephone banking and mobile banking. It was the first domestic bank to obtain a national technological patent. The Bank's application of technology has played a major role in ensuring the constant improvement of service standards.

The Bank's courage to innovate and probe into management systems has allowed for its continuous development. The Bank has tirelessly sought out ways of becoming a highly sound and modern commercial bank for 20 years. In 20 years of searching and probing for optimal business and management systems, the Industrial Bank has amassed a large number of successful experiences and examples in financial reform for others to follow. It was among the first domestic banks to form a board of directors, a board of supervisors and to introduce foreign concepts and experts to improve corporate governance. It was among the first to establish a management system with a single legal person and operation in tiers, to introduce modern bank management means such as asset/debt ratio management, classified management for credit assets, capital constraint management as well as EVA management, to pursue a division system and establish business centers and management centers away from Headquarters, to introduce ISO 9001 quality systems and conduct process reengineering and to conduct market acquisitions......

The Bank's spirit of enterprising and fighting for victory is its greatest means of forging ahead in a competitive market. Few are able to comprehend the difficulties that the Industrial Bank faced as a newly founded company. Its beginnings were indeed humble. The bank's earliest branches were simple to say the least. Some were set up in rooms leased out by travel agents and some were not even as large as a standard dormitory unit. The facilities were as simple and basic as could be, an incapacious counter, an abacus, an account book, and a cashbox.

Even when it expanded outside of Fujian Province, its brand was unknown and it found itself in alien environments. Many people would doubt the legitimacy of the Bank, and, in the face of such doubts, the Bank was forced to stick photocopies of its numerous licenses on the counters in branches to reassure bankers. Not being endowed with the conditions for easy success, the people at the Bank relied on their never say die spirit, doing their best to increase the exposure of the bank and build up business client by client. Their efforts were met by huge increases in the scale of business and the number of clients, and this momentum became unstoppable.

Harmony through Responsibility

Companies that are prosperous on a long term basis certainly are courageous in taking responsibility and good at constructing harmony. The Industrial Bank has not shied away from this.

In May 2008, the world was shocked by a catastrophic earthquake that struck Sichuan Province. The Industrial Bank was among the first banks in the county to offer priority services to those making donations. The Bank and staff were quick to donate to the disaster relief effort, with the total sum donated standing at more than RMB 20 million Yuan. The average donation per person in the Bank was near RMB 1000 Yuan. The Industrial Bank became the first bank to grant loans to the post disaster reconstruction effort, granting an initial RMB 200 million in loans.

In June 2007, the Bank donated RMB 10 million Yuan to found the “Industrial Bank Charity Education Fund”. The fund will see 2500 students through higher education over a 5-year period.

Since the year 2002, the Bank has been offering long-term support to certain impoverished rural areas in Zhangzhou and Ningde......

According to incomplete statistics, the Industrial Bank has donated more than RMB 50 million to charitable causes as education, disaster relief and poverty alleviation over the last 20 years. There is an unwritten rule in the Industrial Bank. Every time a new branch is opened, the bank opts out of holding grandiose celebrations, and the money that would have been used for this is instead put toward charitable causes.

In addition to sparing no effort in charitable causes, the Bank has also embarked on a path of sustainable finance. Through this, it has managed to find a point of convergence between the Bank's responsibility to society and its commercial activities.

In 2005, the Industrial Bank launched its Bank-bank Platform, the first of its kind in the country. This marked the birth of a new mode of cooperation in which domestic banks can share mutual benefit in a number of areas such as clients, network, information, technology, products and management. At present, over 100 small and medium sized banks have entered into cooperation agreements with the Industrial Bank. The total number of outlets involved is more than 10,000.

In May 2005, the Industrial Bank and the IFC launched a green credit service known as “Energy Efficiency Loans”, the first of its kind in the country. By the end of June 2008, the Bank had provided over RMB 210 million Yuan in finance to a total of 69 projects aimed at energy-saving and emission-cutting in 14 provinces and municipalities. The projects that it has supported are expected to be able to reduce the consumption of standard coal by 2.3 million tons per year and emissions of carbon dioxide by 6.5 million tons. This is equal to the amount of carbon dioxide emitted by 38,000 taxis in a year.

In May 2008 the Bank launched its China Heart Card. The Bank has promised that before December 31,2010, RMB 1 Yuan will be donated to charity for every China Heart Card successfully issued and RMB 1 cent for every transaction made using the card. Funds donated will go to the China Foundation for Poverty Alleviation for the alleviation of poverty, disaster relief, education and other good causes.

These are but a few examples of the Bank's commitment to good causes.

Ambition and Excellence

20 years of trials and tribulations in a competitive market has forged an increasingly mature and confident Bank. The Bank has never turned away from its sacred mission of leading the way in financial reform and contributing to the development of the economy. Likewise it has remained true to its goal of becoming a first rate bank that will prosper for decades. With this, the Bank is certain to have an even brighter future, no matter what dangers and challenges await it.

 

 

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