In Hong Kong, we build a global business empire

Chapter 790 To Sell or to Keep?

Kang Le Building, 51st floor, Lin Haoran's personal office.

“Tuk-tuk-tuk~”

A knock came at the office door, bringing Lin Haoran back to his senses.

"Come in."

The person who walked in was Ma Shimin, whom they hadn't seen for several days.

"Boss, congratulations on securing another super-large bank!" Ma Shimin said with a big smile as he walked in.

"Mr. Ma, when did you get back? Have you arranged everything in Beijing?" Lin Haoran asked in surprise.

“Everything has been arranged. I just returned to Hong Kong and heard such big news. I never expected that Hengsheng Group would acquire Huifeng Bank. It’s such a surprise!” Ma Shimin said with some emotion.

“I was actually surprised by this as well. I never thought that Standard Chartered Bank would be so eager to sell Huifeng Bank to us. So we had no choice but to take it over.” Lin Haoran laughed.

“I strongly agree with the decision to acquire Huafeng Bank. Hengsheng Group’s development in Hong Kong has reached a bottleneck, and Huafeng Bank’s overseas channels overlap with Standard Chartered Bank’s, such as the Middle East market, the South African market, the Southeast Asian market, etc. Standard Chartered Bank also has its own branch network in these areas, so there is obvious overlap in market business.”

Therefore, they look down on Huifeng Bank's overseas markets. In Standard Chartered Bank's eyes, the Hong Kong market is probably the only market share they are interested in.

However, the overseas markets that Standard Chartered Bank doesn't value are extremely important to Hengsheng Group. Acquiring Huifeng Bank and its overseas markets would be of immense value to Hengsheng Group. Boss, your move is truly brilliant! Ma Shimin exclaimed sincerely.

Isn't this exactly what Lin Haoran was thinking when he wanted to acquire Huifeng Bank?
Having money isn't enough to develop Hengsheng Group into a global financial giant.

After all, Hengsheng Group doesn't have a powerful government backing it; it mostly has to rely on itself.

Overseas, many markets require strict approval from local governments to enter, a process that is often lengthy and difficult.

However, by acquiring Huifeng Bank, Hengsheng Group directly gained access to these markets and a mature operating network, which can save Hengsheng Group at least five to ten years of development time.

In Lin Haoran's view, the HK$10 billion was well spent.

Just then, there was another knock on the office door.

The one who came in was He Shanheng.

At this moment, He Shanheng's face was glowing.

The acquisition of Hengsheng Bank by Huifeng Bank was a huge ordeal for him.

Now, Hengsheng Group has acquired Huifeng Bank, which is a remarkable turnaround.

Although Hengsheng Group is not He Shanheng's business, and the company that acquired Huifeng Bank was not Hengsheng Bank, but its parent company.

However, even though He Shanheng is now the chairman of Hengsheng Group, he is still in charge of the group as a professional manager. This is still the most glorious chapter in his career.

"Oh, Mr. Ma has returned to Hong Kong?" He Shanheng was somewhat surprised to see Ma Shimin in his office.

"Yes, I just got back and came to see the boss. Congratulations, Mr. He, Hengsheng Group has grown even stronger." Ma Shimin said with a smile.

"This is a generous gift that Standard Chartered Bank offered us voluntarily; it would be hard for us not to accept it," He Shanheng said with a hearty laugh.

"Uncle He, is the handover with Standard Chartered Bank complete?" Lin Haoran asked with a smile.

"Yes, the handover is almost complete. Haoran, I came up to you to ask if you would like to go to the Huifeng headquarters building? The management and employees there all hope to meet you, their new boss."

Now that Huifeng Bank has suddenly experienced such a major upheaval, morale there is currently unstable. Your personal intervention to calm them down will definitely be very effective,” He Shanheng said.

Upon hearing this, Lin Haoran thought for a moment and then nodded: "We should indeed go. Uncle He, Mr. Ma, let's go together!"

As the chairman of the Galaxy Strategic Development Committee, Ma Shimin is responsible for coordinating even the Hengsheng Group, so he should naturally go there as well.

The three of them rode in a private car from Kang Le Building to Huifeng Headquarters Building.

Along the way, Ma Shimin talked about his experiences in Beijing over the past few days.

Before long, the convoy arrived at Huifeng's headquarters building.

Standing outside the building, Lin Haoran looked up at the old building that had a history of 46 years.

This building is actually the third-generation headquarters of Huifeng Bank. Built in 1935, it is in the Chicago School style and has 13 floors. At the time of its completion, it was the largest building in the Far East.

However, compared to Hong Kong in 1981, this building clearly looked rather old.

But the historical weight this building carries is unmatched by any skyscrapers that have been built.

In fact, according to the development of another world, Huifeng Bank would have prepared to demolish this building as early as July, and build the fourth-generation Huifeng Building on its land, which is the famous Huifeng headquarters building in later generations.

However, starting in April or May of this year, Huifeng Bank engaged in a fierce business battle with Bank of East Asia, and almost went bankrupt in July, so the reconstruction plan naturally did not start smoothly.

Now, Huifeng Bank is in the hands of Hengsheng Group. It can be said that this building has gone through many twists and turns!
The group entered the Huifeng headquarters building and were quickly spotted by the employees inside.

The foreign employees hesitated, unsure how to address their new boss, Lin Haoran.

A quick-witted Chinese employee was the first to react, bowing respectfully and saying, "Hello, Mr. Lin! Hello, Mr. He! Hello, Mr. Ma!"

Whether it's Lin Haoran, Ma Shimin, or He Shanheng, they are all well-known figures in Hong Kong, so these employees naturally recognized them.

This greeting broke the awkward silence, and other employees followed suit, with greetings echoing throughout the lobby.

Lin Haoran smiled and replied directly in Hong Kong dialect, "Good morning, everyone. Let's get back to work."

His composed demeanor put the foreign employees present at ease.

Today is October 26th, the day after Standard Chartered Bank and Hengsheng Group reached a deal.

The group took the elevator to the 5th floor of the building.

Finally, we arrived at an office.

Lin Haoran was very familiar with this office.

This is the former chairman's office of Sir Michael Sandberg.

Lin Haoran used to come here quite often. He still remembers how arrogant and domineering Shen Bi was back then.

Now, times have changed, and Shen Bi is nowhere to be found, while the office has changed hands.

The office furnishings have been largely preserved as they were, with mahogany desks, leather sofas, and Victorian-era oil paintings on the walls, showcasing the luxury and authority of the former British tycoon.

At this moment, sitting in the office were two former officials from the time of Shen Bi: John Bao and William Pu Weishi.

John Bowie served as Vice Chairman of the Board of Directors of HSBC during Sir Michael Sandberg's tenure. After HSBC was acquired by Standard Chartered Bank, Bowie was appointed as the new Chairman of the Board, while Prudential continued to serve as an Executive Director.

Upon seeing Lin Haoran and the others enter, the two quickly sat up.

The two men were visibly embarrassed looking at their new boss, Lin Haoran.

After all, when Hui Fung Bank was competing with Bank of East Asia, those two came up with quite a few bad ideas.

Now, Lin Haoran, their business rival, has become their boss. How could the two not feel awkward?
“Mr. Lin, Mr. He, Mr. Ma,” John Bao spoke first, his voice slightly strained.

Pu Weishi quickly followed suit and greeted him as well.

Both of them were in a bad mood at the moment.

Originally, Standard Chartered's acquisition of HSBC would have had some impact on them, but not much, since Standard Chartered itself is a British company.

But now, with Huifeng Bank being acquired by Hengsheng Group, it's a complete upheaval for these British executives, meaning it's uncertain whether they can continue to hold senior positions at Huifeng Bank.

Lin Haoran took in their unease, but walked to the sofa without making a sound, sat down, and gestured for them to sit: "Mr. Bao, Mr. Pu, please don't be so formal, please sit down."

The two looked at each other before sitting down.

He Shanheng and Ma Shimin were already seated on either side of Lin Haoran.

This was undoubtedly the first formal meeting between Huifeng's former employees and the new boss, and the atmosphere was subtle and tense.

Lin Haoran crossed his legs and calmly looked at the two senior executives of Huifeng Bank in front of him.

A few months ago, these two came up with a lot of bad ideas that put East Asia Bank in a difficult situation.

However, Lin Haoran did not hold a grudge against them.

The business world is like a battlefield. It's normal for people to use some tricks when they're fighting for their own interests.

Now that Huifeng Bank has changed hands, there's no need for him to dwell on these old stories. The atmosphere was somewhat awkward, as no one spoke.

After about a minute, John Bao finally couldn't help but speak up: "Mr. Lin, Mr. He, I'd like to know, now that your group has become the parent company of Huifeng Bank, how do you plan to arrange things for us? Will you fire us, or will you let us stay on?"

John Bao's voice carried a hint of trepidation; this question had clearly been lingering in his mind for a long time.

He might not have slept well at all last night, which can be seen from his dark circles under his eyes.

The change of ownership of Huifeng Bank happened so suddenly that Standard Chartered Bank did not consult with them at all, so they had no idea that Standard Chartered Bank had been negotiating with Hengsheng Group for several days.

The same was true of Pu Weishi, who sat next to John Bao.

Speaking of which, this Pu Weishi was Shen Bi's successor, so his abilities were naturally not lacking.

In Lin Haoran's previous life, Huifeng Bank, under the leadership of Pu Weishi, gradually became one of the world's top ten banks.

However, Lin Haoran did not rush to speak. Instead, he turned to He Shanheng and asked with a smile, "Uncle He, what do you think?"

As a renowned banker in Hong Kong, and with Hang Seng Bank having been controlled by Hui Fung Bank for over a decade, Ho Sin-hang had dealt extensively with John Bowers and Paul Williams, and was clearly more familiar with them than his boss.

He Shanheng nodded in understanding, then turned his gaze to John Bao and Wei Shi Pu, speaking in a calm yet authoritative tone: "Mr. Bao, Mr. Pu, we are old acquaintances."

To be honest, when Huifeng was competing with East Asia, you did use a lot of tricks, even ruthless ones. But business is like war, so let bygones be bygones.

He paused, carefully observing the expressions of the two men, and continued, "What Huifeng Bank needs most right now is a stable transition. Mr. Bao has extensive experience in banking business management, and Mr. Pu is very knowledgeable about overseas markets. These are exactly what we urgently need right now."

John Paul and William P. visibly relaxed upon hearing this.

Their biggest worry was that if Lin Haoran held a grudge, their future at Huifeng Bank would probably be over.

It now seems that the new boss values ​​practical ability more.

He Shanheng turned to Lin Haoran and said, "Haoran, I think Mr. Bao can continue to be in charge of the daily operations of Huifeng Bank. He is indeed the most suitable person for this position."

As for Mr. Pu, he is the perfect candidate for overseas business. Now that we have acquired a controlling stake in Huifeng Bank, it can become an important platform for our Hengsheng Group to develop overseas markets.

Lin Haoran nodded in satisfaction and said, "From now on, Huifeng Bank will be part of Hengsheng Group. Uncle He, you are the chairman of Hengsheng Group, so you can arrange this matter."

Then, Lin Haoran looked at John Bao and Wei Shi and said with a smile, "Mr. Bao, Mr. Wei Shi, what do you think of Mr. He Shanheng's arrangements?"

John Bao immediately straightened his back and solemnly replied, "Thank you for your trust, Mr. Lin and Mr. He! It is my honor to continue serving Huifeng Bank."

I guarantee that I will fully cooperate with Mr. He's work to ensure the normal daily operations of Huifeng Bank in the future.

Pewter also stated: "I fully accept this arrangement. Overseas business has always been my expertise, especially the turnaround of US-based Sino-Fortune Bank. I already have a detailed plan."

With the support of Hengsheng Group, Huifeng Bank's overseas business is sure to usher in a new era.

Lin Haoran nodded in satisfaction: "Very good. Since you two are both willing to continue working for Huifeng, then I will formally appoint Mr. Bao as the General Manager of Huifeng Bank and Mr. Pu as the Executive Director, primarily responsible for overseas business."

He stood up, walked over to the two men, and said sincerely, "I hope you understand that I, Lin Haoran, have always trusted the people I employ. As long as you work diligently, Huifeng Bank will never mistreat any employee who makes a contribution."

These words completely dispelled John Bowie and William P.'s last remaining concerns.

John Bao said excitedly, "Mr. Lin, to be honest, we had prepared for the worst before we came, but we didn't expect you to be so magnanimous. We will definitely repay your trust with our actions."

Pu Weishi chimed in, "With Huifeng Bank in your hands, it will surely create an even more brilliant future."

At this moment, both foreigners became sycophants.

Of course, Lin Haoran also knew that these two were indeed talented.

"Yes, Mr. John Bao, could you please compile a detailed list of information about Haifeng Bank for me, especially the financial statements and business structure analysis for the past three years?" Lin Haoran instructed. "I need a comprehensive understanding of this bank's operations."

John Bao immediately replied, "Boss, we have detailed information about Haifeng Bank here. I'll get it for you right away."

As he spoke, he got up and walked to the bookshelf behind his desk, took out a folder from it, and then handed it to Lin Haoran, respectfully presenting the document to his new boss.

At this moment, John Bao's way of addressing Lin Haoran changed.

“If there’s nothing else, you can go ahead and get back to work. Mr. He Shanheng and I have some things to discuss. Before you leave work, please gather all the headquarters staff in the staff meeting room. I’ll be there then.” Lin Haoran said to John Bao, holding the document.

“Okay, boss. In that case, we’ll head out and get back to work.” John Bao nodded and left the office with Victor Puvis, quietly closing the door behind them.

Only Lin Haoran, Ma Shimin, and He Shanheng remained in the office.

Before acquiring Huifeng Bank, Lin Haoran had actually obtained information about Haifeng Bank, which was sent by Standard Chartered Bank.

However, compared to the information Lin Haoran had, the previous information was significantly simpler and lacked detail.

He flipped through a few pages, then closed the book again before looking at He Shanheng and asking, "Uncle He, you must have already seen this information before, right?"

“Indeed, I myself was once a member of the board of directors of Haifeng Bank and have a deep understanding of Haifeng Bank. After the acquisition deal was completed yesterday, I specifically reviewed this document last night and gained a clearer understanding of the current situation of Haifeng Bank.”

He Shanheng said with a solemn expression, "To be honest, the situation is more serious than we expected."

Upon hearing this, Ma Shimin immediately asked with concern, "Mr. He, what exactly is the situation?"

He Shanheng took the document from Lin Haoran and turned to a page: "Look here, Haifeng Bank lost $3600 million last year and has already lost about $2500 million in the first three quarters of this year. What's more serious is that their non-performing loan ratio is as high as 8.2%, far exceeding the industry average."

Lin Haoran and Ma Shimin both looked at the data.

Initially, HSBC hoped to enter the US market through the acquisition of SITC Bank, thereby achieving business diversification and internationalization.

However, between 1974 and 1975, the Bank of Southwest Airlines was in trouble due to the economic recession, with a surge in non-performing loans, a sharp decline in profits, and even losses. This was an important reason why the Bank of Southwest Airlines acquired the bank, which had total assets of US$255 billion, for only US$3.41 million.

In retrospect, this deal has indeed been a heavy burden for Huifeng Bank.

"Based on my observations of the US banking industry, SITC's current return on capital is still at the bottom among all US banks."

Repairing its balance sheet would require not only continuous and substantial investment, but also the dual challenges of integrating its business and improving profitability, making the actual operation extremely difficult.

In addition, HSBC and SITC have fundamentally different business models.

Haifeng Bank employs a data-driven credit approval and customer management system, while HSBC has long adhered to a 'relationship-based banking' model, relying on interpersonal networks built on long-term trust to conduct business.

This difference in business models meant that although HSBC attempted to integrate the acquisition, it was unable to overcome the barriers of culture and management logic, ultimately resulting in failure.

"Today, SITC's biggest advantage is its network of about 300 branches throughout New York State," He Shanheng added.

"So, in your opinion, should we sell or keep Haifeng Bank?" Lin Haoran asked directly.

Lin Haoran's question went straight to the heart of the matter, and the atmosphere in the office immediately became tense.

He Shanheng pondered for a moment, then slowly said, "I think we should sell!"

He Shanheng's answer surprised Lin Haoran.

Even Ma Shimin showed a surprised expression.

"Mr. He, didn't you just say that Haifeng Bank's branches are very valuable?" Ma Shimin asked, puzzled.

He Shanheng sighed and explained, “It certainly has value, otherwise Huifeng Bank wouldn’t have spent so much to acquire it and attempt to integrate it, but the cost is too high.”

Just think about it, how much capital would it take to turn around a bank that's losing tens of millions of dollars a year? More importantly, we also have to face two almost unsolvable problems: cultural differences and conflicting management styles.

Pointing to the data in the document, he added in a solemn tone: "According to my calculations, at least several hundred million US dollars more investment is needed to restore SITC Bank's profitability, and it will require an integration period of five to ten years."

Even so, whether the situation can ultimately be reversed remains to be seen, and the process will face multiple uncertainties and risks, including policy changes and market fluctuations.

In fact, HSBC's acquisition of SITC Bank was indeed a wrong decision.

In another world, after HSBC acquired SITC, SITC caused huge losses to HSBC due to integration difficulties leading to declining performance, low management efficiency of senior US executives, and risks brought about by changes in the market environment.

“If we choose to sell Haifeng Bank, the problem we face is not only having to lower the price, but also losing a great opportunity to enter the US market. Is this a big problem for us?” Lin Haoran said with a frown.

Lin Haoran's question hit the nail on the head; it is indeed very difficult for foreign banks to enter the US market.

Huifeng Bank paid a considerable price to acquire Haifeng Bank, and ultimately relied on the endorsement and support of the Governor's Office to successfully reach the acquisition agreement.

Ma Shimin nodded in agreement: "The boss is right. The US market is crucial to our globalization strategy. If we abandon SITC Bank, we are essentially giving up a shortcut to the US market."

He Shanheng, however, had a different view: "I understand your concerns, but we need to weigh the pros and cons. SITC Bank is indeed a shortcut for us to enter the US market, but the cost of this shortcut is too high."

Most importantly, we don't only have SITC Bank as an option.

(End of this chapter)