Self-redemption of a bank manager

I was an account manager who had worked in commercial banks for more than ten years. Because of this decade of work, I have re-acquainted myself. Graduated in 2006, I studied social sciences and from the study of post-war Southeast Asia, I learned that authoritarian may be more effective than democratic voting for economic development, although this knowledge has nothing to do with my career, and my boss or customers were not concerned. The reason for my choice of banking career is very simple – the high pay, especially the management trainee position for some major banks.

Lei Jun, the founder of Xiaomi, once said that the pigs can fly with the wind (opportunities). This example is also applicable to working apart from entrepreneurship. When I worked in a bank, I saw a lot of people who were smart and capable, but there was more mediocrity. For more than a decade, commercial banks have experienced a lot of opportunities, such as selling structural equity-linked investment products before the financial tsunami, on the surface placing high-interest deposits with the chance to covert in shares at discount, but in fact shorting equity options. After the tsunami, the government supported small and medium-sized enterprises to provide guarantee for commercial loans. Bank staff leveraged to cross-sell keyman insurance to bundle with SME loans. The continued Renminbi appreciation from 2009 to 2015 led to a large number of arbitrage products, including the 3-in-1 L/C loans, structured RMB contracts, etc., all of which were lucrative products to banks. As a result, a generation of account managers put a lot of emphasis on cross-selling products but less efforts on traditional commercial credit and trade finance, making less bankers who truly treasure the long-term interests of their clients.

Before 2000, the banks and corporate customers were going hand-in-hand, from the establishment of company to the evolving into large enterprises.  Even during the economic difficulties and financial turmoil, banks would not easily give up customers, and customers would not change their bankers given small price differences. Therefore, when I first entered the bank in mid 2000s, I still enjoyed the old good tradition of customer relationship and I consider my career as a long-term profession rather than a simple job. At that time, I remember when I first entered the bank, I heard that the bank’s CEO had said that since the front-line account manager had to deal with the customer’s credit, in order to maintain the credit quality and avoid conflicts of interest, it was not suitable to tie the bonus with their performance. However, how many bankers still have this idea today?

Commercial banks have always been long-term partners of enterprises. The most ideal scenario is of course the sustainable revenue or loan growth of 5-10% a year but not 30% in first year and substantially drop afterwards. However, in the near-zero age after the financial tsunami, banks seem to be unable to resist huge short-term benefits. About eight or nine years ago, when USD/CNY was still around 6.50, there was a 3-in-1 arbitrage business that was very popular among cross-border traders. The reason is that there was purely arbitrate for profit. The principle is that the domestic RMB deposits rate was 4-5% while offshore USD loans was 1-2%. Shorting of future RMB would guarantee thousands basis points return (the expected appreciation of the RMB), and the combined one-year return was about 3% less transaction fee. The return would increase if there was a way to U-turn fund back to China for another route of arbitrate business. Banks were excited with this kind of business. First, this type of business involved high volume transaction with meaningful profits and little paperwork. However, the biggest challenge was that the business itself depended on the market trend. Once the market conditions changed, for example, RMB no longer appreciated or the interest rate went reverse direction, and the business needs would completely vanish. Moreover, the renminbi was not freely circulated and this type of business was doing as if it were genuine trade transaction which was subject to compliance risks. Meanwhile, Chinese government did not encourage people to arbitrage.

At the same time, an innovative structural treasury product was also launched, which was more attractive to some customers. As long as the renminbi continued to appreciate, customers could receive a cash rebate on a monthly basis, on the conditions that the customer would have to purchase large amount of RMB at pre-agreed price if RMB depreciated. In 2015, I heard that a commodity trader had lost more than 100 million Hong Kong dollars from the renminbi contracts while he only earned ten to twenty millions from related contracts before. The hidden risks were actually higher than what customer perceived originally. Like many product cycles, we were dubious at the beginning when it first launched, and then generally promoted to different customers in one or two years until the bubble burst. Customer lost, bank management cut ties and then a group of aggressive salespeople quitted the job leaving the mess to the newcomer for settlement. Over my banking career, I have experienced different similar cycles. I have looked back at the many businesses that I have handled, and wonder how many of them have been completed because of satisfying for cross-selling requirement from banks.

The sales pressure culture of the group has a huge influence on a young bank staff. When you try to forgo the long-term relationship and hard-sell the products, it is actually very easy to achieve the goal. The appreciation from the boss and outperforming the senior staff who failed to deliver the results were actually very fascinating. With my own hard work and a little trick, I have experienced a relatively fast career growth over the past few years, but this mentality has changed over time.

I have heard the speech at a senior banker retirement, saying that his client manager has gone through three stages of career. When a young man just debuted, he has no customer base, and he struggles to get new business but to work very hard. Customers appreciated the hard work of this young man and willing to offer business opportunities to him, given the price was best in market. Then, after several years, this young man has become a senior relationship manager, accumulating a lot of business networks. Customers are willing to take his offers as long as the loan conditions and pricing are reasonable. As time goes by, he is not only a relationship manager but also an advisor to many clients. He is not only doing business, but also caring about the long-term development and interests of customers. When customer has major development decisions, such as M&A projects, customer cares about his analysis of the pros and cons, and the bankers are never hard-selling the business. Such customers will always be friends of bankers and will not change banks for little cost saving.

Having said that, in the past ten years, I have found that some colleagues and friends who have a good performance at the beginning of their careers may not eventually able to gain much respect from their customers because interests of their customers are not always ahead of the short-term bank’s profits. For me, the work experience has sharpened my mentality and let me recognize my weaknesses in early 30s. In any case, if time can be recalled, I hope that I would have more customers, not just business.

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