Deutsche Bank is losing one of its most senior Chinese investment bankers, Lee Zhang, to the Industrial and Commercial Bank of China (ICBC) in a high-profile appointment by the Chinese government, the German bank confirmed in a statement yesterday.
Zhang, 45, who has worked at Deutsche Bank for 10 years and holds the dual posts as China chairman and head of global banking for Asia-Pacific ex-Japan, has been appointed vice-president of ICBC. The appointment is subject to the approval of the China Banking Regulatory Commission, according to a filing with Hong Kong Exchanges and Clearing.
This is the first senior management position at a major Chinese bank to be filled externally by an executive from a foreign bank, a rare practice in China's state-run institutions where senior management is routinely relocated from another state-owned firm or directly from the government.
As Zhang has a dual role at Deutsche Bank, his job will be split between two other senior executives. Richard Yacenda, who is currently chief operating officer for Asia and based in Beijing, will become chairman for China, subject to regulatory approval. While Robert Rankin, chief executive officer of Deutsche Bank Asia-Pacific, will take over the global banking job. Both appointments are on an interim basis in addition to their existing responsibilities, one source said.
A search for permanent replacements is ongoing and new appointments will be announced in due course, people familiar with the situation said.
Media speculation about Zhang's new position has been rife for some time, but sources say the job has only become a done deal now, as there are a lot of politics involved in an appointment at this level in China. Indeed, there have been a lot of discussions between Chinese authorities and Deutsche Bank in relation to the appointment over the past two months, with people as high up as Josef Ackermann, chief executive officer and chairman of the German bank, being directly involved.
In a release, Deutsche Bank said Zhang is to "follow [a] government call", and Ackermann said the bank wishes Lee well in his new role. He added that "China is and will remain a global priority market for Deutsche Bank".
ICBC, which is China's and the world's largest bank by revenues, didn't specify Zhang's job description but sources say there are only six people at the level of vice-president at the bank and Zhang will be the only one with international experience. The hire was approved at an ICBC board meeting yesterday afternoon.
Zhang is expected to have to take a steep pay cut. ICBC's highest-paid employee last year was its chairman, Jiang Jianqing, whose total remuneration before tax was Rmb911,000 ($133,400), although clearly this isn't the kind of job that one takes for the money.
Zhang has been instrumental in building Deutsche Bank's platform in China, including securing licences to conduct just about every kind of business, except for secondary equity market trading.
He gained much of his fame from ICBC's record-breaking $21.9 billion initial public offering for which his Deutsche Bank team was one of the bookrunners. ICBC's share price has surged more than 90% in Hong Kong since its listing in 2006, and the bank became one of the world's largest lenders by market value last year. His team also helped arrange the popular IPOs for China Life Insurance and China Shenhua Energy.
Deutsche Bank said last December that its pre-tax profits may reach a record $13.7 billion in 2011, helped by expansion in Asia. Its net revenues in Asia-Pacific ex-Japan may almost double to about $5.4 billion by 2011, it said.
Zhang joined Deutsche Bank from Goldman Sachs in 2001 as head of its China corporate finance business and two years later was promoted to China chairman. He is a member of the National Committee of the Chinese People's Political Consultative Conference, an advisory body to the nation's legislature, and also acts as a financial adviser to the city of Beijing and the governor of Northern China's Heilongjiang province.
