In Hong Kong, we build a global business empire

Chapter 791 Lin Haoran is going to expand into the United States? Citibank is panicking.

Is Haifeng Bank not the only option available?

Lin Haoran and Ma Shimin immediately showed interest, focusing their gazes on He Shanheng and waiting for him to continue.

Seeing this, He Shanheng continued, "Huifeng Bank actually established an office in the United States a long time ago. Although its branch history in the United States can be traced back more than a hundred years, it was limited by its influence."

To this day, it still focuses on trade finance, with its business concentrated in the San Francisco and New York markets. It primarily meets trade finance needs and does not extensively engage in retail banking. Its customer base is also predominantly Chinese.

The biggest problem behind this is that HSBC has very low brand recognition in the United States, and policy obstacles have greatly limited its expansion.

Therefore, HSBC's acquisition of SITC Bank was driven by its interest in the US retail banking business, such as savings and credit services.

However, while SITC has a certain level of brand recognition in New York State, its brand recognition drops significantly outside of New York State.

They had considered expanding their market, but the long-standing single-bank system in various U.S. states prohibits banks from establishing branches outside their state. As a New York state-owned institution, Haifeng Bank's business scope was strictly limited by law, preventing it from expanding beyond state borders.

At this point, He Shanheng paused for a moment and drank a cup of tea.

He then continued, "Moreover, Haifeng Bank's main business is lending, with savings accounting for a very small proportion, which makes the bank extremely vulnerable to losses."

Especially during economic downturns, many of the loans issued cannot be recovered, which leads to liabilities for Haifeng Bank.

Most importantly, New York State, where SITC is located, is home to many powerful banks, such as Citibank, Bank of New York, and Mellon Bank.

Haifeng Bank has long since reached a bottleneck in its development. Without a powerful conglomerate as its backer, it is simply unable to continue expanding. Moreover, the US government is relatively exclusive towards the banking industry, so even if we increase our investment in Haifeng Bank in the future, it will not have much effect.

Therefore, it is clear that Haifeng Bank does not actually meet the development needs of Huifeng Bank, and is even unsuitable for our entire Hengsheng Group; it is incompatible with our future development plan.

Ma Shimin said thoughtfully, "What does Mr. He mean?"

He Shanheng's words still did not provide a concrete solution; they merely indicated that Hengsheng Bank was not suitable to hold shares in Haifeng Bank.

Lin Haoran also looked at He Shanheng with a puzzled expression.

In fact, as someone who had been through it all, Lin Haoran also knew that Huifeng Bank's acquisition of Haifeng Bank was indeed a mistake. Even though Huifeng Bank later became one of the world's top ten banks, it did not rely on the American market, but on its successful acquisition of the British Milant Bank, becoming one of the four major banks in the UK.

However, he only had a slight understanding of it, and he certainly didn't know anything about the operation of Haifeng Bank after it acquired Haifeng Bank.

“When the shareholders of Haifeng Bank expressed their intention to sell their controlling stake, local banks also made offers, but the prices were very low, which ultimately allowed Huifeng Bank to seize the opportunity and successfully acquire the stake.”

Since the outbreak of the oil crisis, the global economy has been in a downturn, and no one can predict how long this slump will last.

Starting in the mid-1970s, Haifeng Bank had accumulated too many bad customers, and a large amount of funds could not be recovered. In the end, the heavy debt burden fell on Haifeng Bank itself.

If Huifeng Bank doesn't inject capital into it, Haifeng Bank will inevitably run into serious problems sooner or later, let alone expect it to expand further.

Back when Hengsheng Bank was still a subsidiary of Huifeng Bank, Mr. Sir Michael Sandberg consulted me when Huifeng Bank acquired Haifeng Bank. After studying the company and the US market, I voted against it.

However, since they had already determined their development path, they naturally wouldn't change their plans because of my opposition, and ultimately they still acquired SITC Bank.

Therefore, I have only one suggestion for the US market: abandon SITC Bank. It's a money-losing company. Our idea of ​​expanding our market in the US and competing with local financial giants like Citibank is a mistake.

After all, as everyone knows, the United States imposes many restrictions on foreign banks, making it difficult for us to truly penetrate the mainstream market. American financial groups will also not allow outsiders like us to grow and become powerful on their turf.

What we need to do now is to consolidate and enhance our markets in Southeast Asia, the Middle East, South Africa, and South Asia.

In that case, why don't we just sell it off and instead consider establishing a strategic partnership with a local bank? This way, we can leverage their distribution network while mitigating the risks that might arise from direct operation.

For Hengsheng Group to become a world-class banking group, it is not necessary to grow and become stronger in the United States. Rather, we should extend our market to every corner of the world.

"Like Citibank, it is indeed very strong in New York, but it has almost no market outside of New York. What makes it a top global bank is its strong total assets and its branches all over the world," He Shanheng continued.

After listening to He Shanheng's analysis, Lin Haoran fell into deep thought.

Ma Shimin nodded repeatedly, clearly convinced by He Shanheng.

In fact, He Shanheng's analysis is very rational.

The US market is very different from other markets.

This is a very exclusive and extremely competitive market.

Even for powerful international banks, gaining a foothold in the US market is by no means easy.

It is virtually impossible for Hengsheng Group to grow and become a major player in the US market.

The ultimate possibility is that they will be consistently excluded by American conglomerates, who may even use local governments to suppress these outsiders.

Even in the 21st century, the US banking market is still dominated by domestic banks, and there are almost no foreign banks that have grown into large and powerful entities in the US.

In fact, He Shanheng's meaning was very simple: there was no need to waste his energy on Haifeng Bank, which was a money-losing enterprise. Even if he tried his best to turn it around, Haifeng Bank would have difficulty growing.

Lin Haoran slowly stood up and paced around the office, deep in thought.

Outside the window, sunlight streamed through the blinds, casting dappled shadows on his face.

“Uncle He is right,” Lin Haoran finally spoke. “We should indeed give up on Haifeng Bank. Rather than going head-to-head in the xenophobic American market, it’s better to concentrate our resources in areas where we have a stronger advantage.”

He understood the principle that you can't get fat overnight.

Most importantly, now that Hengsheng Group has acquired Huifeng Bank and gained access to Huifeng Bank's channels in markets such as the Middle East, it should focus on developing these markets, stabilizing them, and then proceeding with its next steps.

Ma Shimin immediately chimed in: "Boss is wise, but how should we deal with this hot potato? We need to minimize the losses while leaving room for future development in the US market."

"In fact, we have already made arrangements in the United States. Mr. Ma and Uncle He should also know that I am already a member of the board of directors of Citibank."

When Mr. Walter Riston, Chairman of the Board of Directors of Citibank, invited me to raise funds for Citibank, I successfully acquired 3% of Citibank shares at half the market price.

"Therefore, Hengsheng Group has already established a strategic partnership with Citibank. In this light, we really don't need to rush into the US market," Lin Haoran said with a smile.

Ma Shimin and He Shanheng both nodded.

They naturally knew this; back then, Mr. Walter Riston, the chairman of the board of Citibank, personally came to Hong Kong to invite Lin Haoran to join Citibank.

This matter caused quite a stir at the time, and it happened in July, less than four months ago.

Lin Haoran walked to the window, looked down at the bustling Central Street below, and continued, "With Citibank as a strategic partner, we have gained a firm foothold in the US market."

In comparison, Haifeng Bank, a hopeless case, certainly seems superfluous.

There was something else he didn't reveal: he had actually become the largest shareholder of Citibank several months earlier.

His plans for Citibank are far more sophisticated than anyone imagined.

To this day, Su Zhixue's Universal Investment Company continues to secretly acquire shares of Citibank.

Back in July, after acquiring a 3% stake through proactive financing from Citibank, and adding to the nearly 4% stake previously acquired by Universal Investment Company, the company held a total of 7% of the shares.

With this, Lin Haoran became the largest shareholder of Citibank.

Now, three or four months later, Huanyu Investment Company's stake in Citibank has increased by about 1%, which means that Lin Haoran now holds more than 8% of Citibank's shares.

If this news were to be released, it would absolutely shock the entire United States.

After all, that's Citibank!
This news just hasn't been made public yet.

Lin Haoran did not want to reveal this information so soon.

His goal is to acquire at least a 20% stake in Citibank.

Today, his relationship with Citibank is that of a very close strategic partnership, with the aim of relying on Citibank to help him do things in the United States that he cannot do on his own.

After all, Citibank is one of the top ten financial groups in the United States, and it has very strong connections even in Congress.

If a bank wants to expand and grow its business in the United States, it will inevitably lose an ally like Citibank and instead become an enemy of its competitors.

This would shatter his plan to rely on Citibank to develop his business in the United States.

This is undoubtedly a case of picking up a sesame seed but losing a watermelon.

After all, he is now at most a private business force without a powerful backer. In other people's eyes, he is undoubtedly just a fat fish that everyone wants to take a bite of.

He can be tough in Hong Kong, but he's not suited to be too tough in the United States, at least not for now.

The US financial market is too complex; a more low-key approach to development is clearly more appropriate.

In the future, when the Squid Consortium wants to take over Citibank, he can then join forces with other American consortia to stop them, which will naturally increase his influence in Citibank.

As a result, the Hengsheng Group's role in the United States is not significant.

How can Hengsheng Group become a US financial giant?
The probability is close to 0.

Moreover, even if Hengsheng Group can grow and thrive in the United States, as a foreign company, how could it easily influence the decisions of the U.S. Congress?

Politicians are inherently xenophobic, a trait that cannot be achieved simply through capital expansion.

The core strategic value of Hengsheng Group's expansion into the US lies in paving the way for other business segments under Lin Haoran's umbrella. However, if it cannot exert effective influence at the policy level, its empowering effect will inevitably be greatly reduced, since in the US market, policy trends often determine business success or failure.

In contrast, his position as a director of Citibank is a more pragmatic breakthrough.

Through the influence of the board of directors, Citigroup can indirectly mobilize its global resource network to handle many matters that are difficult for companies to coordinate directly.

This strategy of "leveraging existing forces to break through" not only avoids the sensitive risks of political-business power struggles but also forms a substantial protective barrier.

More importantly, the deep ties with Citibank constitute a strategic deterrent in themselves.

Any business action targeting Lin Haoran's companies must weigh the interests of Citigroup. This invisible "moat" is often more deterrent than direct confrontation.

At this moment, Lin Haoran thought about many, many things.

As a result, SITC Bank gradually became a discarded asset.

He Shanheng hadn't thought that far ahead, after all, he didn't know that Lin Haoran had secretly become the largest shareholder of Citibank.

So he continued, "How to deal with this hot potato of Haifeng Bank is actually very simple. Just find a buyer to sell it. I have already conducted a comprehensive asset assessment of Haifeng Bank and figured out its true value."

Secondly, we need to find suitable buyers, preferably regional banks that want to expand their influence in New York State. Finding suitable buyers will then be much easier.

"Alright, Uncle He, I'll leave the sale of Haifeng Bank to you. There's no rush. What's more important now is to merge with Huifeng Bank, absorb its overseas markets, and thus strengthen the Hengsheng Group."

As for Haifeng Bank, it's not too late to deal with it when we have time." Lin Haoran made the decision directly.

Meanwhile, in New York, far away in the Western Hemisphere, darkness had already enveloped the city.

Citibank headquarters, Chairman's office.

It was already past 8 p.m., and the office lights were on brightly.

As chairman of Citibank, Walter Riston often works very late.

At this moment, he is sitting at his desk, carefully reviewing important recent documents.

Suddenly, his personal phone rang.

"Hello, this is Walter."

"Mr. Chairman, I have some important news to tell you. I will send you the details via fax later..."

The call was made by the general manager of Citibank's Hong Kong branch.

After a long while, Walter Riston frowned and put down the phone.

Not long after, a document arrived from the fax machine next to the printer.

The document details the acquisition of Huifeng Bank by Hengsheng Group.

"So, Lin Haoran has become the owner of Haifeng Bank?" At this moment, Walter Riston's expression was somewhat unpleasant.

In New York State, SITC is a direct competitor of Citibank. While SITC may not be very successful in overseas markets, it is quite strong in New York State.

Now, Lin Haoran, a major client of Citibank, has actually become the boss of its competitor, Haifeng Bank.
This surprised Walter Riston.

He stood up and paced back and forth in the office, his brow furrowed.

"What exactly is Lin Haoran up to?" Walter Riston muttered to himself.

As the head of Citibank, Walter Riston knew all too well the value of Lin Haoran.

This young tycoon from Hong Kong is not only wealthy but also possesses exceptional business acumen.

The gold futures battle back then shocked the entire senior management of Citibank. The more they learned about Lin Haoran afterward, the more they realized how strong his abilities were in the business world.

Over the past three years, Citibank has also made considerable profits through its partnership with Lin Haoran.

Therefore, at the board meeting, Walter Riston decided to recruit Lin Haoran, a promising new star in the business world, to join the Citibank board of directors, and even sold 3% of the shares to Lin Haoran at half price.

It can be said that the intention to win him over is already obvious. Citibank regards Lin Haoran as an important strategic partner for the future and hopes to work with him to create a brilliant future.

However, this sudden acquisition news immediately put Walter Riston in a difficult position.

He was not worried that Haifeng Bank itself could pose a threat to Citibank. As He Shanheng analyzed, Haifeng Bank had a shallow foundation, was limited to one corner, and was blindly expanding, making it difficult to achieve anything significant.

What worried him was Lin Haoran's intentions.

This young Eastern tycoon is meticulous in his thinking and decisive in his actions. Every step he takes seems casual, but in fact, it is full of profound meaning.

Was his investment in Citigroup a genuine pursuit of strategic cooperation, or merely a means to gain access to a high-level platform and insider information?

Now that he owns Haifeng Bank, even if it's a "money-losing" bank, it means that Lin Haoran has a foothold in the American banking industry.

Will he be content to let SITC Bank remain as it is, or will he try to use it as a fulcrum to leverage a larger situation?
If he chooses the latter, the transformation of his relationship with Citibank from partner to potential competitor could happen in the blink of an eye.

Walter Riston knew all too well how wealthy Lin Haoran was.

If Lin Haoran really invests a huge amount of money into Huifeng Bank, wouldn't that allow Haifeng Bank to launch a fierce attack in New York State?

Even if it cannot shake the foundation of Citibank, it is enough to disrupt the market and bring unnecessary trouble and costs.

More importantly, this goes against Citibank's original intention in courting Lin Haoran—to ally with him and strengthen Citibank's power.

Instead of creating a new opponent!
The news came so suddenly that Walter Riston was not prepared at all.

Although he knew beforehand that Lin Haoran was involved in the banking industry, Hengsheng Group had not expanded into the United States, and its cooperation in the United States still depended on Citibank.

Therefore, thanks to Hengsheng Group, Lin Haoran's cooperation with Citibank has become deeper, and he has gained more profits.

But now, the other party has directly acquired HSBC and extended its reach into the United States through HSBC's subsidiary, SITC Bank, which is a completely different matter.

This means that Lin Haoran now has an independent financial platform in the United States. Most importantly, this platform is very powerful. Although it is just a bank mired in difficulties, its New York State banking license and existing branches are potential springboards.

Walter Riston never underestimated Lin Haoran because of his youth.

If they really underestimated him, they wouldn't have personally recruited him to join the Citibank board of directors.

Because of his deep understanding of Lin Haoran, Walter Riston worried that, given Lin Haoran's wealth and methods, who could guarantee that he wouldn't use this springboard to stir up new trouble in New York State?
At this moment, Walter Ryston's mind was in turmoil.

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

"Please come in." Walter Riston snapped out of his reverie.

But it was John Reid, the vice president of Citibank, who walked in.

The future successor to Walter Riston is holding a briefcase, clearly preparing to leave work.

That's normal, since it's already quite late. Normally, they would finish get off work at 5 p.m.

“John, you’ve come at the right time. I have something important to tell you,” Walter Riston said seriously.

“Mr. Walter, what’s wrong?” John Reed asked curiously.

He originally planned to come in, say hello, and then go home after get off work.

Unexpectedly, as soon as he entered, the other party told him that they had something important to tell him.

Walter Riston then told the other party in detail about Lin Haoran's acquisition of Huifeng Bank and that Haifeng Bank was a subsidiary of Huifeng Bank, and handed him the documents faxed from Hong Kong.

John Reed's abilities as a successor are beyond question.

For this reason, Walter Reston always valued John Reed highly, and John Reed made significant contributions to many important decisions.

John Reed took the document and quickly scanned it.

His brow furrowed more and more as he read on, and his expression turned serious when he came across the information about Haifeng Bank.

“What do you think about this?” Walter Riston asked.

“This was indeed an accident.” John Reed put down the documents, his tone grave. “Lin Haoran’s move was quite ingenious. By acquiring HSBC, he not only gained a mature overseas network but also unexpectedly gained a foothold in New York State.”

Walter Riston paced around his office, saying, “That’s exactly what I’m worried about. Haifeng Bank is indeed a mess right now, but with Lin Haoran’s wealth and methods, who can guarantee that he won’t turn it around?”

New York State banking licenses and existing branch networks are scarce resources.

Most importantly, we gave them 3% of the shares and even brought them onto our board of directors. This move of theirs is completely unexpected.

Lin Haoran's acquisition of Huifeng Bank indirectly controlled Haifeng Bank, completely disrupting Citibank's plans against it.

Citibank originally hoped to use board seats and shares to firmly bind Lin Haoran to Citibank's chariot.

But now it seems he's playing a much bigger game?
(End of this chapter)