In Hong Kong, we build a global business empire

Chapter 792 Coincidence
Inside the office, John Reed frowned, his expression grave.

He never expected that such a big thing would happen before he left work.

At this moment, his thoughts involuntarily drifted back to the scene of his first meeting with Lin Haoran.

That was in June 1979. As Lin Haoran's direct contact, he witnessed a legend in the financial world.

Lin Haoran entered the gold futures market with a principal of 50 million US dollars and leverage of 10 times.

In just a few months, by January 1980, this investment had raked in a staggering $11.4 billion in profit!
Keep in mind, this was in the early 1980s!

Let alone $11 billion, even $1 million would be an astronomical figure these days.

For John Reed, to reap such a huge profit from a single gold futures transaction was an unprecedented feat!

Subsequently, Citibank, which was not optimistic about an investment opportunity, referred it to Lin Haoran. This opportunity was to invest in the emerging Apple company.

After gaining a thorough understanding of Apple's business model, development prospects, and team potential, Lin Haoran did not hesitate at all and decisively invested ten million US dollars to successfully acquire 10% of Apple's shares.

Who could have predicted that this investment, which Citibank looked down upon, would turn into gold in Lin Haoran's hands?

In less than a year, Lin Haoran reaped an astonishing return of $3.25 million from his 10% stake.

Such staggering returns have taken notice of the entire American investment community.

As the investment bank that was initially contacted by Apple but missed such a great opportunity due to a misjudgment, there was an uproar within Citibank.

Lin Haoran was undoubtedly the most talented business and finance genius John Reed had ever seen.

It is truly remarkable that such a brilliant and talented person was born in faraway Hong Kong, rather than on Wall Street in New York, the heart of finance!

“John, what do you think we should do about this situation?” Walter Riston’s voice interrupted John Reid’s recollection.

John Reed pulled himself out of his reverie and turned his gaze back to the problem at hand.

He lowered his head slightly and pondered for a moment.

Then he slowly raised his head and said, "Mr. Walter, based on my experience dealing with Mr. Lin Haoran, he always plans carefully before acting and never makes worthless investments."

Therefore, our first priority now is to figure out his true intentions in this action.

Based on information from Hong Kong, it is highly likely that the acquisition of Huifeng Bank by Lin Haoran's Hengsheng Group was an unexpected move.

The initial intention of Hengsheng Group was likely to acquire the right to issue banknotes in Hong Kong, which ultimately led to the acquisition of Huifeng Bank.

In other words, prior to this, Hengsheng Group should not have had any plans to acquire Huifeng Bank.

The indirect acquisition of a controlling stake in Haifeng Bank was a completely unexpected situation! However, an accident is still an accident.

While the other party may not have originally planned a large-scale investment in the US financial industry, their unexpected acquisition of a controlling stake in Huifeng Bank raises questions about whether they will change their minds.

Walter Riston nodded to signal him to continue.

John Reed stated clearly, "So I think we can proceed in three steps. First, we need to immediately use our relationship with the New York Board of Supervisors to closely monitor the fund movements of SITC."

If SITC receives a large-scale capital injection, it indicates that it indeed intends to expand its presence in the US market.

“What if that’s the case?” Walter pressed.

John Reed continued, “Then we can activate the competition clause in the agreement, which stipulates that if Lin Haoran’s companies directly compete with Citibank in the core market, we have the right to repurchase the 3% stake at the original price.”

At the same time, we can also use our influence in New York State to set up some 'reasonable' regulatory obstacles to the expansion of SITC's business. Huifeng Bank was able to acquire SITC mainly because of the support of the British government, while Mr. Lin Haoran does not have such a background.

John Reed's meaning was very clear: if things really came to this, Citibank would essentially be severing all ties with Lin Haoran.

Walter stroked his chin thoughtfully: "What if he doesn't intend to invest?"

"That means his acquisition of Haifeng Bank may just be a side deal with the HSBC deal, or he may have other plans."

John Reed's eyes gleamed, and he smiled, saying, "Now is the time for us to take the initiative and offer to acquire SITC. This will both eliminate a potential threat and strengthen our position in New York State."

“But this acquisition offer must be carefully considered,” John Reed added. “We can’t appear too eager, giving Lin Haoran the opportunity to raise the price; yet we also need to demonstrate our sincerity to him, avoiding any damage to our partnership.”

Walter Riston frowned and said, "But SITC is not in a good position. Acquiring this bank is not a good idea for us."

Walter Riston knew his state rival, Haffield Bank, all too well.

Despite its considerable size, SITC Bank suffered from extremely low operating efficiency, poor asset quality, and a vague strategic direction—problems that were common knowledge in the American financial community.

Its nearly 300 branches were expanded almost blindly without proper planning.

In pursuit of performance, management recklessly approved and issued loans, resulting in a persistently high non-performing loan ratio compared to its peers and a mountain of bad debts piling up.

It is precisely because of these factors that SITC Bank's performance in the US stock market has been sluggish, with its stock price remaining at a low level for a long time.

Initially, the major shareholders of Haifeng Bank intended to sell their shares, and Citibank also considered the acquisition but ultimately abandoned it. Instead, it was acquired by Huifeng Bank, an overseas bank from Hong Kong.

John Reed said confidently, "That's the key point, Mr. Walter. Our purpose in acquiring Haifeng Bank is not to operate it, but to eliminate a potential threat."

He stood up and paced around the office, analyzing the situation: "Think about it, if Lin Haoran really decides to revitalize Haifeng Bank, with his abilities and financial resources, he could very well transform it into a formidable competitor."

Rather than watching this happen, we should strike first.

Walter looked thoughtful: "You mean, after we acquire Haifeng Bank, we can break it up and restructure it?"

“Exactly,” John Reed nodded. “We can retain only the best branches and customer resources of Haifeng Bank in New York State and divest its bad assets.”

This would both solidify and even enhance our market position in New York State, and prevent Lin Haoran from establishing a financial presence in the United States through Haifeng Bank.

"But will Lin Haoran accept this proposal?" Walter still had doubts. "He can see right through our true intentions."

John Reed smiled slightly: "That's the art of negotiation. We can package an acquisition as 'helping our partners solve a problem'."

Emphasizing the operational difficulties of Haifeng Bank, it was pointed out that Hengsheng Group lacked operational experience in the United States, and that we were willing to take over this "hot potato" at a reasonable price.

He returned to his seat and continued his analysis: "Furthermore, we can make some concessions on the acquisition terms, such as allowing financing of SITC Bank with Citibank shares."

By allowing Huifeng Bank, a bank recently acquired by Lin Haoran, to hold a certain percentage of Citibank's shares, we achieve our strategic objectives without damaging our existing partnership; in fact, we strengthen the cooperative relationship between Lin Haoran and Citibank.

Walter Riston paced back and forth in his office, finally stopping at the window: “You’re right, John, we have to handle this carefully.”

Lin Haoran is no ordinary business partner; we've all witnessed his capabilities and vision.

“More importantly,” Walter turned around, his expression serious, “even if we successfully acquire Haifeng Bank, we must ensure that our relationship with Lin Haoran remains unaffected.”

His resources and investment acumen in the Asian market are crucial to Citigroup's future development.

Although the collaboration with Lin Haoran lasted less than three years, Citibank has already made a considerable profit in that short period.

This is among the top of Citibank's many important clients!
Such clients deserve to be maintained with the utmost sincerity.

John Reed nodded in agreement: "I suggest that you visit your friends at the New York Banking Regulatory Authority first thing tomorrow morning. I was originally scheduled to go to the Manila branch the day after tomorrow to handle some business."

Now we can adjust our itinerary and depart a day earlier, flying to Hong Kong to meet with Mr. Lin Haoran in person.

Walter pondered for a moment, then nodded in approval of the arrangement: "That's good. You can go to Hong Kong in person to show our sincerity and also observe Lin Haoran's true attitude in person."

Remember, the focus of this meeting is not to rush into a deal, but to build mutual trust.

“I understand.” John Reed understood. “I will first hear his plans for SITC Bank, and then make our acquisition proposal when the time is right.”

The important thing is to make him feel that we always consider him an important strategic partner.

Walter Riston added, "Furthermore, you could imply that if this deal goes through, our cooperation with him will be even closer in the future. As far as I know, his Real Estate Group wants to enter the US market, and if this deal is successful, we at Citibank will be Real Estate Group's biggest backer in the US!"

“This proposal carries significant weight.” John Reed’s eyes lit up. “Mr. Lin’s business empire has grown increasingly vast. As the world’s largest economy, the United States will certainly not be able to abandon the world’s largest market in the future.”

If we can provide support in this regard, I believe it will greatly increase the likelihood that he will accept the acquisition offer.

Walter Riston smiled confidently: "That's right. We need to make him understand that the value of deepening cooperation with Citibank far outweighs the hot potato of holding SITC Bank."

It's getting late. Since you've decided to leave for Hong Kong tomorrow morning, you should go back and get some rest. I'll handle things at headquarters with the other higher-ups!

John Reed nodded and said, "Okay, Mr. Walter, I'll head back now. You should also go back and get some rest."

At this moment, neither Lin Haoran nor the two bigwigs from Citibank knew that their thoughts had unexpectedly coincided!

……

Hong Kong, Huifeng Bank Headquarters Building.

Chairman's Office.

At this moment, Lin Haoran, Ma Shimin, and He Shanheng were still in the office.

It was already 10:00 AM. The three of them were mainly discussing the future development of the newly acquired bank.

"By the way, Haoran, I have something very important to tell you," He Shanheng said, changing the subject.

"Uncle He, please speak frankly," Lin Haoran said with a smile.

“This building is 46 years old, and its architecture and facilities are severely outdated. Moreover, with the development of HSBC in recent years, its office space has become seriously insufficient,” He Shanheng said.

Lin Haoran nodded. Indeed, the building looked quite old, and the number of workstations in the offices outside showed that there were not enough spaces.

Although Huifeng Bank's market share has declined significantly after being repeatedly drained by Standard Chartered Bank, Bank of East Asia, and Hang Seng Bank, it is now far less valuable than before.

However, as a century-old institution, HSBC still has a large number of employees.

Moreover, Huifeng Bank is now part of Hengsheng Group, and will naturally develop vigorously in the future.

He Shanheng added, "Before being acquired by Standard Chartered Bank, Huifeng Bank had already planned the reconstruction of its headquarters building and even specially invited internationally renowned architect Norman Foster to personally design it."

According to the original plan, the building was supposed to break ground in July, but due to various factors, the plan had to be postponed repeatedly.

Now that our Hengsheng Group has successfully acquired a controlling stake in Huifeng Bank, should we continue to push forward with this restructuring plan?

"The Huifeng Headquarters Building Reconstruction Plan?" Lin Haoran's mind immediately conjured up the image of the magnificent Huifeng Headquarters Building he had looked up at from downstairs in his previous life.

He especially remembered the four uniquely designed gun emplacements on the roof of the building.

“Yes, the building reconstruction plan was already in place when Mr. Sim Bi was the head of the building. Unfortunately, so many things happened afterward that it was naturally delayed. I still have the design documents here, let me show them to you.”

As He Shanheng spoke with emotion, he opened the handbag next to him.

Clearly, he received the documents during the handover yesterday.

Soon, a document was placed on Lin Haoran's desk.

Ma Shimin couldn't help but glance at it sideways.

"General Planning Outline for the Fourth Generation Xiangjiang Huifeng Headquarters Building"

Lin Haoran opened the document and the architectural blueprints inside were immediately revealed to him.

Detailed data and information are also provided alongside.

The building is 180 meters tall and has 46 floors and 4 basement levels.

The building is expected to be constructed using 30000 metric tons of steel and 4500 metric tons of aluminum.

The building will feature an externally suspended steel structure and prefabricated components, pioneering a column-free space design.

The building's exterior was exactly like the Huifeng Building he had seen in his previous life, except that it lacked the four "cannon emplacements".

In fact, the decorative components for these four gun emplacements were added in 1991.

In 1989, after the Bank of China Tower was completed, its triangular design was regarded as a "sword" and formed a feng shui confrontation with the headquarters of Huifeng Bank. Huifeng therefore believed that the decline in the company's stock price and the setback in its performance were caused by the feng shui arrangement of the Bank of China Tower.

In response to this situation, Huifeng Bank installed four cannon-shaped decorative components on the roof in 1991 to neutralize the negative energy through "using force to subdue evil."

Strangely enough, after the four cannon-shaped decorative components were installed, Huifeng Bank turned a profit in 1992 and its stock price rebounded.
Meanwhile, the Bank of China Tower experienced management changes and a decline in performance during the same period.

Interestingly, this change in feng shui layout has also caused disputes due to typhoons. In 1991, a typhoon caused two of the cannons to turn their muzzles toward the neighboring Standard Chartered Bank.

Standard Chartered Bank then sent a lawyer's letter to Huifeng Bank, demanding that it change the direction of its attack.

This incident was widely reported and became a focus of attention for Hong Kong's business and legal communities.

Looking at the blueprints, Lin Haoran couldn't help but smile as the famous "Feng Shui battle" from his previous life flashed through his mind.

The concept of Feng Shui exists if you believe in it, and it doesn't exist if you don't.

But importantly, this reflects that architecture is not only a functional space, but also a symbol of corporate image and culture.

Huifeng Bank's claim of believing in feng shui is perhaps a deliberate attempt to demonstrate to the public and restore their confidence in the bank.

Of course, this happened in Lin Haoran's previous life.

The world he now inhabits has been completely changed because of his time travel.

Huifeng Bank is no longer the same Huifeng Bank; it has lost its status as a financial giant and has now been acquired by this Chinese businessman.

Therefore, this interesting "feng shui battle" probably won't happen in the future.

"The exterior of this building is quite nice." Ma Shimin's voice brought Lin Haoran back to his senses.

"The estimated construction cost is around $10 billion?" Upon seeing this, Lin Haoran found it outrageous.

$10 billion, not Hong Kong dollars.

A 180-meter-tall building, designed in the early 80s, was estimated to cost a staggering US$10 billion to build, which is equivalent to HK$52 billion!

Upon seeing this, Lin Haoran couldn't help but shake his head; it was utterly absurd.

For example, the world's tallest building currently under construction in Central by Hongkong Land Group, designed by the renowned American architectural firm Gensler, is estimated to cost only a little over HK$3 billion.

This building, which is only 180 meters tall, cost a staggering HK$52 billion.

In Lin Haoran's opinion, this was simply outrageous!
In fact, what Lin Haoran didn't know was that the final construction cost of this building was indeed close to the estimate, costing a full HK$52 billion.

There are reasons why the construction cost is so high.

First, the building's 3 tons of steel components came from the UK, the glass and 4500 tons of aluminum components came from the US, and the service components came from Japan.

This model of global collaboration was groundbreaking at the time, but it also significantly increased transportation and coordination costs.

In addition, the building adopts a modular design, consisting of five large steel modules, all of which were prefabricated in a British shipyard and then transported to Hong Kong for assembly.

While this process improves efficiency, it also results in high costs for prefabrication and transportation.

In addition, the glass curtain wall and aluminum skin used are high-end materials, which are expensive and result in excessive costs.

There are several other reasons that contribute to the high construction costs of this building.

In the past, when HSBC was at its peak, spending HK$52 billion to build a new headquarters not only demonstrated its strong capital strength and leading position in the industry, but also enhanced its brand image and market competitiveness, declaring its unshakeable dominance to the entire Hong Kong and even the global financial community.

However, today's Huifeng Bank is not the same Huifeng Bank it once was.

Not only is it no longer the dominant force in Hong Kong's financial world, with its market share shrinking significantly and profitability declining considerably, but more importantly, it is now part of the Hengsheng Group and needs to redefine its role. There is absolutely no need for it to build such an extravagant and expensive building.

Economic efficiency and practicality are the only true principles.

He Shanheng saw Lin Haoran's concerns and said, "Haoran, I understand your thoughts. Given HSBC's current situation, it is indeed not suitable to invest such a huge sum of money in building a new headquarters, so I do not agree to continue with this design."

Simon Murray agreed: "HK$52 billion is not a small sum. If this money were used for business expansion and market development, it could bring more direct returns."

Lin Haoran paced back and forth in his office, deep in thought, before suddenly stopping. "But then again," he said, "a modern headquarters is indeed crucial for enhancing a company's image. The current headquarters of Huifeng Bank simply cannot meet future development needs. We need to find a balance between image enhancement and cost control. Therefore, the fourth-generation Huifeng headquarters building definitely needs to be built."

He returned to his seat, his gaze returning to the design drawings: "However, it's definitely not worthwhile to build such a building for HK$52 billion, so let's redesign the building. In this location, a height of 200 to 300 meters would be better. As for the construction cost, let's keep it within HK$20 billion."

HK$20 billion is more than enough to build a skyscraper between 200 and 300 meters tall.

For example, the famous Bank of China Tower, which was started in 1985 and completed in 1989, has 70 floors above ground and is 315 meters tall. With the two poles on top, the total height is 367.4 meters.

The total investment for such a building is only US$2.5 million, which is just over a billion Hong Kong dollars.

Therefore, HK$20 billion is more than enough to build the new HSBC building!
He Shanheng immediately understood Lin Haoran's intention: "That's right. If we keep the budget at HK$20 billion and increase the building height to 200-300 meters, it would be suitable both practically and symbolically. Moreover, using our own land would indeed save a lot on land costs."

Ma Shimin added, "I suggest inviting multiple architectural design firms to participate in the bidding process, requiring them to unleash their creativity within the budget. This would ensure both design quality and cost control."

Lin Haoran nodded in agreement: "This is a good idea. We don't want to build the most luxurious headquarters, but the most suitable one. It should reflect our strength, but more importantly, our wisdom and pragmatism."

However, I have a suggestion. Do you know Mr. I.M. Pei?

“Of course, I.M. Pei is a very famous American architect and a member of the American Academy of Arts and Sciences. I know him,” He Shanheng said with a smile.

Ma Shimin nodded in agreement.

"I suggest we ask him to design it!" Lin Haoran proposed.

The Bank of China Tower was designed by Mr. I.M. Pei.

In Lin Haoran's view, it was perfectly fitting that this renowned Chinese architect designed the new headquarters of Huifeng Bank.

(End of this chapter)