In Hong Kong, we build a global business empire

Chapter 783 Standard Chartered Wants to Get Rid of the Burden of Huifeng Bank
Hong Kong, Central, Standard Chartered Building.

As usual, Standard Chartered Bank's new tycoon, Tyronn, arrived at the company office early.

As a senior executive at Standard Chartered Bank, Tyron has truly experienced the benefits of being a tycoon in Hong Kong.

At Standard Chartered's headquarters in the UK, although he was one of the senior executives, he was ultimately not the one in charge.

On the contrary, in Hong Kong, where the market now accounts for nearly half of Standard Chartered Bank's revenue, he, the Hong Kong tycoon, enjoys supreme power and unparalleled prestige.

There's even a high probability that he'll become the successor to the head of Standard Chartered Bank's headquarters in the future!
Having learned from the lessons of his predecessor, Mr. Brown, the financial tycoon of Hong Kong, Tyron did not intend to compete with Lin Haoran for the position of financial hegemon in Hong Kong. Steady progress and steady development were the right path.

After all, Standard Chartered's subsidiary, Huifeng Bank, recently lost two major clients, Hutchison Whampoa and Cheung Kong Holdings, causing Standard Chartered's market share in Hong Kong to decline again.

Having witnessed Lin Haoran's various methods before, he was even more unwilling to provoke Lin Haoran any further.

Standard Chartered Bank is scared; they're genuinely scared.

However, even so, Standard Chartered Bank still holds a market share of nearly HK$550 billion, accounting for about 23% of Hong Kong's financial market, and remains one of Hong Kong's undisputed financial giants.

Although its market share once reached around 27% after acquiring Huifeng Bank.

Even though its market share has fallen to 23% due to the loss of two major clients, Cheung Kong and Hutchison Whampoa, it is still more than double the less than 10% market share it had before acquiring HSBC.

Therefore, after discussing with headquarters, Tyron's most important task at present is to do his best to consolidate the existing market share and develop stealthily without provoking Lin Haoran.

With a market share of over HK$50 billion in Hong Kong, that's enough for them to sustain themselves for a long time.

However, Tyronn now faces a dilemma: how to deal with the predicament of Huifeng Bank.

In fact, Standard Chartered Bank had almost completely drained HSBC's important clients. British clients that originally belonged to HSBC, such as Swire Group, Wheelock & Co., CLP Power, Swire Properties, and Hong Kong Tunnel, were all poached by Standard Chartered Bank.

The defection of these British trading companies and enterprises severely damaged Huifeng Bank, leaving it with only a few important clients and some small fry.

Hutchison Whampoa and Cheung Kong Holdings were among those who remained with HSBC Bank due to an agreement signed between Li Ka-shing and HSBC, making them HSBC Bank's only remaining and most important clients.

However, thanks to Lin Haoran's intervention, both of their most important clients have now chosen to cooperate with Hengsheng Group again.

This means that the last two pillars of Huifeng Bank have also collapsed.

The century-old brand, with its declining market share, has now become a burden for Standard Chartered Bank.

After all, following the acquisition of HSBC, Standard Chartered now holds a 51% stake in HSBC, making it the undisputed parent company of HSBC.

Therefore, headquarters has recently been discussing how to deal with this hot potato.

Tyron rubbed his temples, his gaze falling on the encrypted fax from London on his desk.

The opinions of the headquarters board of directors were divided into two camps:
One faction advocates immediately divesting Huifeng Bank's assets to cut losses in time;

The other side suggests continuing to invest, arguing that the value of this century-old brand has not yet been fully realized.

As a senior executive in Hong Kong, Tyron's opinion is very important.

Therefore, he has been thinking about how to decide Huifeng's future these past few days.

In fact, Huifeng Bank's assets in Hong Kong are of very good quality.

Even though we have lost a large number of important customers and are in debt, it is only because we have lent out a lot of funds in the past and are temporarily unable to recover the funds in time.

These high-quality but temporarily troubled assets have always been key targets for Standard Chartered Bank's capital injection as the parent company.

If Huifeng Bank can weather the storm for two or three years and successfully recoup its investment, it may even be able to turn a profit.

In addition, Huifeng Bank also owns several overseas banks.

Especially its U.S. subsidiary, SITC Bank.

This company has assets of up to $255 billion. It was acquired by HSBC three years ago, and its total assets even far exceed those of its parent company, HSBC Bank.

However, it suffered losses year after year and has become a heavy burden for Huifeng Bank since its acquisition.

Tyronn sat in his chair, his gaze lingering on the financial report of the Harbour Bank, a bank headquartered in Buffalo, New York, which had accumulated losses of nearly $100 million over the past three years.

This overseas burden, in the heyday of Huifeng Bank, was nothing to worry about; it was entirely manageable to withstand the losses.

However, Huifeng Bank is now struggling to survive, and the continuous losses of Haifeng Bank have only exacerbated its situation, making it an even greater burden.

Tyron's fingers tapped unconsciously on the table, but his gaze had already passed through the office's floor-to-ceiling windows and was fixed on the distance.

This is difficult, really difficult!
Without Huifeng Bank, Standard Chartered Bank might be doing much better now!
After all, Standard Chartered Bank has already drained Huifeng Bank of its resources. Even if Standard Chartered Bank were to abandon Huifeng Bank now, it would still be making a fortune.

The acquisition of HSBC has indeed enabled Standard Chartered Bank to achieve a leapfrog growth in its market share in Hong Kong, and has also elevated the overall strength of Standard Chartered Bank to a new level.

Just as Tyron was lost in thought, there was a knock on the door.

"Please come in."

His female secretary came in.

"Mr. Tyron, this is a letter just sent by Hengsheng Group." The female secretary respectfully placed a letter on the desk.

Tyronn frowned slightly.

What is the meaning behind Hengsheng Group sending a formal letter at this critical juncture?
He opened the letter directly, and its contents were immediately displayed before his eyes.

Hengsheng Group

To: Standard Chartered Bank (Hong Kong) Limited
Mr. Tyron's Table
Subject: Urgent letter regarding cooperation on Hong Kong's banknote issuance rights
Dear Mr. Tyron:
Hello!

According to the cooperation agreement jointly signed by our bank and your bank on July 27 of this year, it is clearly stipulated that your bank will assist our bank in obtaining the right to issue banknotes in Hong Kong within three months from the date of signing the contract.

The contract performance period is nearing its end, and as of today (October 20), there are only seven days left until the agreed deadline.

Our bank is well aware that this matter involves multi-party coordination and complex procedures, and therefore has been actively cooperating with your bank to advance the relevant work during this period.

However, given that the issue of the right to issue banknotes is crucial to our business development and market reputation, and with the contract deadline fast approaching, we are writing to you to request that you fulfill your obligations under the contract as soon as possible and ensure that the relevant procedures are completed within the remaining time.

We hope that your bank will give this matter high priority and inform us of the latest developments and specific arrangements in writing within three days.

Please feel free to contact us if you require any cooperation from our company.

This letter is to inform you of my intention to reply.

Best regards!

Hengsheng Group
Chairman: He Shanheng

November 1981, 10"

Tyron put down the letter and frowned.

Unexpectedly, time has passed so quickly. In the blink of an eye, almost three months have passed since Standard Chartered Bank acquired Huifeng Bank.

In order to acquire Huafeng Bank, Standard Chartered Bank did sign a contract with Bank of East Asia, which was owned by Lin Haoran.

The contract clearly stipulates that Standard Chartered Bank must assist Bank of East Asia in obtaining the right to issue banknotes within three months. If this is not achieved, Standard Chartered Bank must compensate Bank of East Asia HK$30 billion.

This high compensation clause was actually proposed by Lin Haoran to prevent Standard Chartered Bank from reneging on its promise after successfully acquiring Huifeng Bank, or from deliberately delaying and failing to fulfill its commitment.

After paying a considerable price, they did manage to persuade the British authorities to grant Lin Haoran's bank the right to issue banknotes in Hong Kong.

However, although the process for this matter has been basically completed, it remains stuck at one point.

That is, to this day, Hong Kong Governor Murray MacLehose has not yet signed the consent document.

Previously, since there was still plenty of time, Standard Chartered Bank remained unhurried despite the urging from the Hengsheng Group. At most, they would reply to the Hengsheng Group that they would put pressure on the Governor's Office to advance the right to issue banknotes, but in reality, they did not take any action.

Unexpectedly, time flew by so quickly that there were only seven days left until the contract deadline.

Tyron rubbed his throbbing temples, sensing things were getting tricky.

A default penalty of HK$3 billion is no small sum, and even for a financial giant like Standard Chartered Bank, it is an expense that requires careful consideration.

Therefore, it is indeed time to put this matter into practice.

"Connect me to the governor's office; I need to speak with him," Tyron said to his secretary without looking up.

“Okay, Mr. Tyron!” the secretary said, and then prepared to make a phone call.

Tyron remained seated, deep in thought. "Spinning off Huifeng? Those old men at headquarters only talk the talk; they have no idea that Haifeng Bank is a bottomless pit in America!"
Continue injecting capital? Standard Chartered's cash flow doesn't grow on trees. Providing lifeline to this half-dead Huifeng, while also facing the possibility of Lin Haoran launching an attack at any moment, is practically suicide..."

Tyron's brows furrowed into a deep frown as he rapidly weighed the pros and cons of various options in his mind.

Suddenly, a bold and somewhat cunning idea struck him like lightning.

He sat up abruptly, a glint of shrewdness flashing in his eyes.

"Why can't we cleverly pass this burden to the person who most wants its 'added value'?" Tyron muttered to himself, a meaningful smile gradually creeping onto his lips.

"Isn't Huifeng Bank's prestigious reputation in Hong Kong and that damned right to issue currency that Lin Haoran has been longing for the best bargaining chips?"

A plan to kill two birds with one stone quickly took shape in his mind: persuade headquarters to sell the 51% stake in Huifeng Bank held by Standard Chartered to Lin Haoran's Hengsheng Group at a 'suitable' price!

If successful, the benefits are obvious:
By getting rid of the burden of HSBC, Standard Chartered can immediately escape the quagmire of losses at Hai Fung Bank and the current operational pressures of HSBC, making its financial statements instantly much cleaner.

Moreover, it can also solve the problem of the right to issue banknotes. With Hengsheng Group becoming the controlling shareholder of Huifeng Bank, the original right to issue banknotes of Huifeng Bank will naturally fall into the hands of Hengsheng.

Wouldn't Lin Haoran's long-desired qualification to issue banknotes be resolved logically?

Standard Chartered fulfilled its contract perfectly, and the HK$30 billion penalty warning has been completely lifted.

Not only that, but they also received a sum of cash. Although they had to "get rid of the burden," Standard Chartered had paid a considerable price to acquire Huifeng, and they couldn't just give it away for free. They were able to negotiate a reasonable price from Lin Haoran, who was eager to obtain the right to issue banknotes.

Most importantly, doing this will not offend Lin Haoran!

"Brilliant!" Tyron couldn't help but slap the table.

The core of this plan is to cleverly use the rules to force Lin Haoran to take over the project.

The applause on the table startled the female secretary, who stopped dialing a number. She looked at her boss cautiously, wondering why he was so excited.

Tyron stopped his secretary from dialing the governor's number and said directly, "Call Standard Chartered headquarters first. I need to speak with the chairman of the board, Lord Derek Barber!"

Although she didn't understand why her boss had suddenly changed his mind, she nodded and dialed the ocean line again.

The call connected, and Lord Derek Barber's steady but slightly weary voice came through: "Tyron? How's the situation in Hong Kong? Headquarters is still debating Huifeng's handling plan."

Tyrone said excitedly, "Lord, I have a bold plan for Huifeng that can completely solve the problem. I need your support and authorization, and I need you to personally go and have key communication with Governor Merrih."

“Oh? Tell me about it.” Lord Derek Barber was clearly intrigued.

Tyron took a deep breath and quickly revealed his entire plan: "My proposal is to sell all of Standard Chartered's 51% stake in Huifeng Bank to Lin Haoran's Hengsheng Group."

There was a few seconds of silence on the other end of the phone, clearly Lord Derek Barber was processing the weight of the proposal.

"Sell it to him? Tyron, given Huifeng's current situation, would Lin Haoran really take it over?"

"My lord, this is the key! What Hengsheng Group wants most right now is the right to issue currency in Hong Kong! This is the cornerstone of its plan to dominate the financial industry in Hong Kong."

"Our contract with Hengsheng has only seven days left. Hengsheng Group just sent me a letter; it seems they're even more anxious than we are. Huifeng Bank happens to possess this qualification they've been dreaming of."

He paused, then revealed the core of the plan: "We will definitely help Hengsheng Group obtain the right to issue currency, otherwise we will have to pay HK$30 billion in compensation, but, the rules!"
We need to utilize the rules, Lord. You must personally call Governor Merrih and explain to him a 'fundamental principle of financial regulation':
Privately owned banks controlled by a single shareholder, due to their overly concentrated shareholding structure and lack of sufficient publicness and transparency, should in principle not be granted the core financial power of issuing banknotes, which involves monetary stability and public credit.

Issuing institutions need a broader shareholder base to reflect their public nature.

Tyron paused for a moment, then continued, “You need to make the Governor fully understand this point, and then ask him to ‘goodwill’ meet with Lin Haoran as a regulator and convey this ‘regulatory spirit’ to him.”

At the same time, it could be pointed out to Mr. Lin tactfully that if he wants to successfully obtain the right to issue banknotes, a more feasible and regulatory-compliant option would be to acquire a mature bank that already has the right to issue banknotes, such as Huifeng Bank.

In this way, he can not only immediately obtain the qualification to issue banknotes, but also inherit Huifeng's century-old brand reputation, customer base and operating system in Hong Kong.

This is far more efficient and reliable than applying for the right to issue currency for a private bank from scratch.

Tyron continued, “Lord, think about it, when Governor Merrih clearly expressed to Lin Haoran from a regulatory standpoint the ‘systemic difficulties’ of private banks obtaining the right to issue banknotes, and ‘thoughtfully’ pointed out that acquiring HSBC was the shortcut, what would Lin Haoran choose?”
Does he even have time to apply for a license from scratch, which is almost impossible to obtain? His only option is to acquire HSBC!

After all, as long as we can help Lin Haoran obtain the right to issue banknotes, it won't be considered a breach of contract on our part. If the other party is unwilling to acquire Huifeng Bank, then that's not our problem.

In this way, we not only get rid of the burden, but we may also be able to cash out at a not-too-bad price.

More importantly, we've completely resolved the breach of contract issue, and this transaction might even help ease tensions with Lin Haoran. After all, we sold him the 'key' he desperately needed!

Lord Derek Barber fell into a long silence on the other end of the phone, the only sound being the light tapping of his fingers on the table.

Tyron waited nervously, his palms slightly sweaty.

He knew that the plan was very risky, and the key was whether Lin Haoran would follow the script they had designed, and whether they could agree on a selling price.

But this is the best solution he can think of right now.

Finally, Lord Derek Barber's voice came again, with a hint of decisiveness and caution: "Mr. Tyron, this plan is indeed bold, and it is ingenious to use regulatory rules to guide the trading."

Lin Haoran is a smart man, and also an extremely assertive one; he might not willingly be 'guided' in this way.

"Lord, it is precisely because he is a smart man that he can calculate costs and benefits and knows how to weigh the pros and cons. Although we must help them obtain the right to issue currency, everything must be done within the rules."

We are willing to sell Huifeng Bank to him, allowing Hengsheng Group to acquire Huifeng Bank and thus obtain the right to issue currency. This would essentially resolve the issue of the right to issue currency.

"Moreover, since Mr. Merrihau is handling this matter, and we've provided him with a path that, while costly, is absolutely feasible, he'll most likely take it," Tyron said decisively.

“Hmm.” Lord Derek Barber pondered, “Governor Merrihow might not be willing to act as this ‘lobbyist’ directly, as it would be seen as interfering with the market. Moreover, his attitude towards Lin Haoran has always been rather subtle.”

“That’s why we need you to personally step in, Lord!” Tyron immediately replied, “to emphasize that this is not market interference, but a necessary regulatory communication based on maintaining the stability of Hong Kong’s financial system and the seriousness of the right to issue currency.”

You might suggest that Standard Chartered, as a British-owned bank deeply rooted in Hong Kong, has a responsibility for Hong Kong's financial stability, and that it is also our obligation to help regulators clarify the rules for new capital.

Mr. Mak Lei Ho would understand, and this would also be beneficial for him in maintaining Hong Kong's financial order.

Although Lin Haoran is powerful, we are, after all, a British-owned enterprise, and truly on the same side as the Governor's House. Mr. MacLehose has no reason to help a Chinese businessman instead of us. It is the most dignified and effective way for Governor MacLehose to offer informal 'advice' in his official capacity.”

There was another moment of silence.

Tyrone could picture Lord Derek Barber pacing back and forth in his London office, deep in thought.

“Alright, Tyron.” Lord Derek Barber finally made his decision, his voice regaining its usual calm and authority. “You’ve convinced me that this plan is worth a try.”

I will convene a board meeting immediately, and once this matter is approved, I will contact Governor Merrih immediately and do everything I can to persuade him to conduct this crucial communication.

On your side, immediately begin preparing a list of HSBC's core assets and liabilities, especially clearly marking the issues with Haifeng Bank, but also highlighting HSBC's value and the intangible asset of its banknote-issuing license.

We need to prepare for negotiations with Hengsheng Group. Remember, price is key. We need to get rid of this burden without causing Standard Chartered too much loss. More importantly, we need to make it clear during the negotiations that this is the fastest and only way for them to obtain the right to issue currency, and one that regulators will find more acceptable!

“Understood, Lord! I’ll prepare immediately!” Tyron’s voice was full of excitement, and half of his anxiety was relieved. “I will keep a close eye on the situation in Hong Kong, especially the reactions of the Governor’s Office and Lin Haoran, and report the progress to you at any time.”

"Yes, keep in touch, and may God bless us and Standard Chartered," Lord Derek Barber said before hanging up.

Hearing the busy tone from the microphone, Tyron let out a long sigh of relief and leaned back in his chair.

The sunlight outside the window seemed even brighter.

He lit a cigar, and through the swirling smoke, his eyes were fixed sharply on the telephone.

He was unwilling to offend Lin Haoran, but that didn't mean he didn't consider Standard Chartered Bank's interests.

Clearly, if Standard Chartered Bank were to truly relinquish the burden of Huifeng Bank to Hengsheng Group, it would be more beneficial than harmful.

After all, Standard Chartered Bank had paid a very high price to acquire Huafeng Bank.

Now, with little profit left in Huifeng Bank, selling it is a good decision, even though it still has considerable value.

He immediately pressed the internal call button: "Notify the heads of the finance, risk control, and legal departments to bring all of Huifeng Bank's core documents to my office immediately! Emergency meeting!"
Furthermore, closely monitor any movements at the Governor's Office and the Hengsheng Group headquarters!

Tyronn needs to do this brilliantly; it's a golden opportunity for him to shine since becoming the head of Standard Chartered Hong Kong.

Lin Haoran, who was in Shanghai, overlooking the Bund from the Sassoon Presidential Suite at the Peace Hotel, was unaware that Standard Chartered Bank was planning to sell Huifeng Bank, a century-old bank in Hong Kong, to him.

Last night, Liu Xiaoli offered herself to him, making his trip to the mainland particularly enjoyable.

After inspecting the business and investment environment in Shanghai, he prepared to return to Hong Kong.

When he set off from Hong Kong for Beijing, he never expected that he would spend more than ten days traveling around the mainland.

What I didn't expect was that the gains from this trip were much greater than I had imagined before setting off!
Overall, this trip to the mainland was very fruitful, both in Beijing and Shanghai.

(End of this chapter)