China’s Oldest Investment Bank Is Being Reshaped by Communism

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China’s bankers are pledging allegiance to the Communist Party and learning to live without Wall Street pay packages. Find out why on the Big Take Asia podcast.

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Gura: Cathy says, the firm, which once embraced the West, is now turning inward, deepening its ties to the Chinese Communist Party: Gura: It’s not something you would’ve seen during the bank’s heyday, when there were fewer party members among the CICC’s ranks, and they wouldn’t have advertised it. And what’s happening at CICC could raise eyebrows among global investors, who are already anxious about China’s opaqueness and find the business environment difficult to navigate.

Chan: The idea is really to help all these state-owned companies in China with structure, reform, and to introduce foreign investors to invest into these companies. Chan: In the early days, because of the backers, you have Morgan Stanley and also GIC, behind, definitely, it was a pretty liberalized, westernized way of managing things.

Gura: But then, something changed. A few years ago, China’s president started to signal a shift in the country’s economic priorities. And he summed it up in a political slogan: “common prosperity.” Gura: Xi’s common prosperity drive had a profound impact on the bank’s performance. But just how did it go from being a premier investment bank to fighting for its future? That’s after the break.

Chan: Definitely, they are not able to retain any talent or attract talent, and that's why you see the morale has been bad. A lot of people I've talked to, they are basically “lying flat,” trying to keep their job unless they find a new one so everyone’s pretty much looking for jobs elsewhere. Chan: I mean, think about if you are no longer working to, for your own interest, why would you bother, kind of working so hard?

Chan: That’s right. Especially for Chinese companies selling stocks overseas, people generally don't believe that there will be a major bounce back, at least this year. Although we are seeing more deals, but we will never be able to go back to the old days. That's the general thinking.

 

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