J.P. Morgan banker named new CEO at HKEx

Once an oil driller in the north China sea, senior banker Charles Li will be the first mainland Chinese person to head the Hong Kong stock exchange when Paul Chow retires in January.

Hong Kong Exchanges and Clearing (HKEx) announced yesterday that Charles Li, currently a China-focused senior investment banker at J.P. Morgan, will take over as its new chief executive when Paul Chow retires in January next year. The appointment, which has been approved by the Securities and Futures Commission, confirms leaks about Li's new job to the local Hong Kong press in mid-May.

Li will join HKEx, which operates Hong Kong's stock and futures exchanges, on October 16 and work alongside Chow for three months to ensure a "smooth transition". He will officially take over as CEO and an ex-officio member of the board of directors on January 16, 2010. Chow will retire from his current office on January 15.

Li, who is 48, will become the first mainland-born person to run the Hong Kong stock exchange, which seems fitting at a time when the links between the exchanges in Hong Kong and those in Shanghai and Shenzhen are getting increasingly close. He also brings 20 years of investment banking and legal experience, including a personal involvement with the first batch of China H-share listings in Hong Kong in the 1990s, which will likely come in handy in his new job. Li is currently chairman of the China business at J.P. Morgan, one of the few US banks to escape the financial crisis relatively unscathed.

Beyond providing a brief biography for Li, the HKEx didn't comment further on the new appointment and it didn't address the concerns that have been aired in the media in recent weeks about Li's lack of direct regulatory experience and the fact that he doesn't speak Cantonese, choosing perhaps to let Li's actions speak for themselves once he gets on board.

HKEx chairman Ronald Arculli did, however, praise outgoing CEO Chow for his leadership and his contribution to enhancing the exchange's regulatory and business performance over the past six years.

"With his extensive experience and expertise in financial markets and management, [Chow] has been instrumental in leading HKEx's executive management in carrying out the previous three-year strategic plan (2004-2006) and in implementing the 2007-2009 strategic plan to address challenges in an increasingly competitive environment. He will leave HKEx in a strong position to build on the solid foundation established during his tenure," Arculli said.

As J.P. Morgan's China chairman -- a position he has held since he joined the bank in 2003 -- Li has been responsible for all of the firm's businesses in China. Key transactions on his watch include CNOOC's attempted takeover of US oil and gas producer Unocal in 2005, which didn't succeed but laid the groundwork for the wave of Chinese companies that have since made acquisitions overseas as they secure a steady supply of natural resources and other raw materials.

In a written statement, J.P. Morgan's chairman and CEO for Asia-Pacific, Gaby Abdelnour, noted that Li has made important contributions to the expansion of the bank's China franchise.

"Through his strong leadership and client relationships, Charles was able to expand our businesses and strengthen our position in China. He will be missed at J.P. Morgan," Abdelnour said.

In addition to his full-time job, Li is currently also an independent director of Vanke, China's largest listed property developer, and of Shanghai Pudong Development Bank, both of which are listed in the mainland. And he serves on the executive board of the China Entrepreneurs Forum, a private sector social organisation.

Before he joined J.P. Morgan, Li spent eight years with Merrill Lynch, the last five as president of Merrill Lynch China. It was during his time with Merrill that he got involved with the H-share listings. He also worked on China's first international bond offering, a $1 billion deal completed in 1994.

Earlier in his career, following his studies in the US, he worked at two major New York law firms, making use of his juris doctor degree from Columbia University. Before he went off to college, he worked as an offshore oil driller in the north China Sea and for three years in the mid-1980s he was a Beijing-based reporter and editor of the China Daily. Li has a Bachelor of Arts degree in English literature from Xiamen University and a BA degree in journalism from the University of Alabama in the US.

Li is expected to leave J.P. Morgan in early July at the latest for a mandatory "cooling off" period before he takes the step across to the "other side". A representative for the bank said no decision has been made yet whether to appoint someone else to the role that is to be vacated by Li. For now, the key responsibilities for the bank's China business will rest with its China CEO Fang Fang and its vice-chairman for China Elaine LaRoche, who joined the bank last year from Morgan Stanley.

The HKEx also announced yesterday that chief operating officer Gerald Greiner's contract will be renewed for a further three years when it expires in February 2010. Meanwhile, Lawrence Fok, head of issuer marketing -- essentially the person responsible for attracting companies from countries other than China to list in Hong Kong -- has agreed to stay on until August 31, 2012. Mary Kao, the HKEx's head of legal services and chief counsel will remain at her post until July 2010. Fok and Kao will both reach the standard retirement age in the third quarter this year. 

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