Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 07GUANGZHOU1267, Citigroup Turning Around Troubled Guangdong Development

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07GUANGZHOU1267.
Reference ID Created Released Classification Origin
07GUANGZHOU1267 2007-12-05 23:15 2011-08-23 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Consulate Guangzhou
VZCZCXYZ0000
RR RUEHWEB

DE RUEHGZ #1267/01 3392315
ZNR UUUUU ZZH
R 052315Z DEC 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6714
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASH DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
UNCLAS GUANGZHOU 001267 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM 
STATE PASS USTR 
 
E.O. 12958: N/A 
TAGS: EFIN CH
SUBJECT: Citigroup Turning Around Troubled Guangdong Development 
Bank 
 
REF: A) SHANGHAI 757, B) GUANGZHOU 850 
 
(U) THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  IT SHOULD NOT BE 
DISSEMINATED OUTSIDE U.S. GOVERNMENT CHANNELS OR IN ANY PUBLIC FORUM 
WITHOUT THE WRITTEN CONCURRENCE OF THE ORIGINATOR.  IT SHOULD NOT BE 
POSTED ON THE INTERNET. 
 
1. (SBU) Summary: Citigroup has made impressive progress in turning 
around Guangdong Development Bank (GDB) in the year since it 
invested in the bank and installed new management.  GDB predicts a 
profit of RMB 1.67 billion (about US$230 million) for 2007 after 
sizeable losses a year earlier.  However, senior management 
described the challenges of changing a culture of lending based on 
relationships, working with the bank's Communist Party organization, 
and cooperating with investment consortium partners.  Citigroup 
hopes eventually to raise its stake in GDB to make it a platform for 
the group's expansion in China, but it also has other goals in mind 
for its investment in GDB.  End summary. 
 
Reforming a "Profoundly Troubled" Bank 
-------------------------------------- 
 
2. (SBU) GDB President Michael Zink described impressive progress in 
turning around what had been a "profoundly troubled" bank when he 
took the helm one year ago.  Zink, a Citigroup employee who was 
seconded to GDB after Citigroup led a consortium to purchase an 
85-percent stake in the bank, has two years left on his three-year 
contract with GDB.  He explained to us on November 23 that when the 
Chinese government founded GDB, the "Development Bank" part of its 
title wasn't just a name.  GDB was created to make loans that would 
encourage development in Guangdong Province, not necessarily loans 
that would earn money for the bank.  As a result, the most 
challenging job for the new management team, led by a small group of 
Citigroup employees, has been changing the culture of awarding loans 
based on connections, or "guanxi," and instead creating a more 
rigorous risk assessment and management system. 
 
3. (SBU) Zink proudly pointed to several measures of improved 
performance at GDB i the last year; most notably, the bank will 
show a profit of about RMB 1.67 billion (US$230 million) in 2007 
after a loss of more than RMB 600 million the previous year.  In 
addition, the bank aims to reduce its non-performing loan ratio 
below 3.3 percent by the end of the year, down from 6.68 percent 
when Citigroup bought its stake.  Zink also said the bank had 
significantly raised its capital adequacy ratio. 
 
With Friends Like These - The Chairman and the Party 
--------------------------------------------- ------- 
 
4. (SBU) Working out a modus vivendi with GDB's Communist Party 
organization has been a major challenge for the new management team, 
according to Zink.  To underscore the power of the Party 
organization within the bank, Zink speculated that if the Chairman 
of the Board of Directors, who also serves as the bank's Party 
Secretary, was forced to choose between those two titles, he would 
 
SIPDIS 
choose to be Party Secretary.  Zink complained of the Party 
organization's lack of transparency.  In the past, the senior bank 
management and Party leadership were identical.  Now, a new group of 
top managers, including Zink, is excluded from Party deliberations. 
He commented that although the management team operated in complete 
transparency, the flow of communication between management and the 
Party went in just one direction. 
 
5. (SBU) Reaching an understanding on how to handle personnel 
decisions was the biggest obstacle in Party-management relations. 
Zink surmised that the ability to name appointments was probably the 
Party's most jealously guarded power within the bank.  However, 
management would be left with little real authority if it had no 
role in personnel decisions.  He explained that after a lot of 
back-and-forth on the issue, the two sides had agreed that the Party 
would nominate a single candidate for open positions and the senior 
management team would have the authority to reject candidates it 
deemed unsuitable.  There had been some positions that had taken 
more than one round of nominations to fill, but Zink believes that 
this arrangement is working fairly well. 
 
With Friends Like These - Partners and Competitors 
--------------------------------------------- ----- 
 
6. (SBU) In addition to working with the Party structure, the team 
from Citigroup has faced challenges in working with its investment 
consortium partners.  Because it is restricted as a foreign 
investor, Citigroup owns only 20 percent of GDB.  IBM, the other 
foreign investor, owns just under 5 percent.  The three Chinese 
 
partners, China Life, Citic Trust and State Grid Corporation, each 
own about 20 percent.  Zink described both IBM and State Grid, an 
electric power company, as financial investors with little interest 
in playing a management role.  He said Citic Trust, as a financial 
services firm, had the potential to become a strategic investor but 
for now had kept a low profile. 
 
7. (SBU) China Life, on the other hand, has behaved more like a 
strategic investor and potential competitor with Citigroup for 
control of GDB, according to Zink.  He believes that since China 
Life's main competitor, Ping An Insurance, bought a controlling 
stake in Shenzhen Commercial Bank, China Life has been eager to 
enter the banking sector and sees GDB as an important platform.  He 
commented that some disagreements attributed to "cultural 
differences" among the consortium partners were more about 
controlling the management of GDB.  However, Zink acknowledged that 
the decision to market China Life insurance products through GDB 
branches and a GDB-China Life co-branded credit card had been 
successful. 
 
Playing Nice with the Regulators 
-------------------------------- 
 
8. (SBU) Zink said that GDB's new management team had been proactive 
in working closely with the China Banking Regulatory Commission 
(CBRC) about reform and development plans for the bank.  GDB has 
notified CBRC well in advance of any changes at the bank.  After 
pushing forward rapidly with reforms in the early stages of the 
takeover, Zink and his managers decided to slow down the pace of 
change to give CBRC more time to absorb their plans.  Zink pointed 
out that because of the foreign stake in GDB, CBRC monitors it more 
closely than most Chinese banks. 
 
Planning for the Future 
----------------------- 
 
9. (SBU) Looking forward, Zink told us that Citigroup hopes it might 
eventually be able to raise its stake in GDB and use it as a 
platform to extend the group's reach into China's second- and 
third-tier cities.  However, he explained that even if Citigroup is 
not permitted to increase its stake, the investment could still be a 
success for the group.  To begin with, he believes that changes at 
GDB have already substantially raised the value of Citigroup's 
investment in the bank.  In addition, Zink said the venture was 
helping Citigroup achieve more abstract goals: learning more about 
China's banking market and demonstrating Citigroup's commitment to 
strengthening China's financial system. 
 
GOLDBERG