Coming of age
| by Colette Steckel 30 Oct 2005 Topic: Members profiles, People |
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Hang Seng is the Chinese phrase for ever-growing, which is how Patrick KW Chan FCCA, CFO of Hang Seng Bank in Hong Kong, might describe his own career in finance. He talks to Colette Steckel about how he rose through the ranks from office boy to director Patrick KW Chan has been honing his finance skills for almost 20 years, but he’ll be the first to admit that it was to his good fortune that he chose to embark on an accounting career back in the 1970s. Today, as CFO of Hang Seng Bank, he plans, directs and executes the financial strategy of the largest domestic bank (1) in Hong Kong. But he stresses that if it wasn’t for his brother, who suggested he become an accountant, he might not have grasped the chance of taking part in “a challenging profession that adds spice to my working life.” He recalls that, as a young man starting out, he didn’t have a clue where his future lay. “I was born in Shanghai but moved to Hong Kong when I was small,” he begins. “As a schoolboy, I didn’t really know much about the world or Hong Kong for that matter. I had a fairly sheltered and disciplined upbringing. My mother was a remarkable but traditional woman. Her philosophy was to raise a good man.” In 1975, when he finished his formal schooling, Patrick applied for various odd jobs, from painting and decorating, to waiting in a five star hotel, to working as a management trainee in a garment factory. “I have no regrets about the work I did back then. They gave me some fascinating exposures. I was quite aimless at that time until my elder brother pointed me in the direction of the accounting profession.” Persuaded that there would always be a demand for accountants in Hong Kong, Patrick joined a large, international audit firm (now named Ernst & Young) as an office boy, while continuing his studies at night school. It’s a rather modest beginning for someone who has risen towards the top of his career today, but Patrick notes that although he worked in administration, his drive and enthusiasm singled him out as a potential trainee within the firm. “I was so hungry to learn. My supervisors gave me the opportunity to make a start on my accounting career and, for that, I owe them a lot.” Over a cup of Chinese tea in one of the meeting rooms of the sleek offices of Hang Seng Bank’s landmark headquarters in Hong Kong, Patrick recounts his early years in the profession with nostalgia and a good dose of humour. He laughs about his ability to paint his house from top to bottom and to advise his wife on the quality of fabric, but he notes that, as a finance professional, he came into his own when he embarked on a career in the banking industry. Reeling off a list of banks he has worked for, including Chase Manhattan Bank, he remarks that he matured in the several years he immersed himself in the highly competitive business of banking in Hong Kong. Little wonder, then, that a headhunter acting for Hang Seng Bank came knocking at his door in 1995. Opportunities He joined the Bank as a financial controller and was appointed CFO in 1998. His decade-long tenure with Hang Seng Bank has brought a raft of challenges but it’s his involvement in developing Hang Seng’s Mainland strategy that really inspires him. “China is a huge market with vast opportunities and, as far as Hang Seng is concerned, we are quite determined that entering the Mainland is the way forward for us. We’re taking a two-pronged strategy: finding strategic partners to jump-start our China business and growing organically,” explains Patrick. Since its accession to the WTO in 2001, the Mainland’s economy has been rapidly expanding. This autumn, the Chinese planning agency announced another year of GDP growth of 9%, heralding China’s continued good fortune. Ongoing financial reform, coupled with the liberalisation of markets, has led to increased foreign participation in local industries. And the prospect of foreign financial institutions providing local currency business by the end of 2006 has international organisations poised to play a greater role in China’s economic development. The Mainland’s potential has not gone unnoticed by the financial services industry in Hong Kong. Operating in a mature and highly competitive market, the opportunities are too good to pass up. In last month’s Hang Seng Economic Monthly, the report announced that “capturing a bigger share of Mainland China’s demand for financial services is central to the growth of Hong Kong’s financial services industry”. The report encouraged the industry to capitalise on the Mainland’s deepening financial reforms and liberalisation of its markets by offering efficient services and innovative financial products. Delivering both to the Mainland would provide long term expansion for Hong Kong based banks, which see themselves as well placed both geographically and culturally to serve customers outside Hong Kong’s territorial boundary. According to Patrick, Hang Seng’s expansion in the Mainland is already gathering pace. In September, the Bank announced the upgrade of its Beijing representative office to a branch bringing the total number of Hang Seng Bank outlets in the Mainland to 12. The first half year results for operations in the Mainland reveal a 21.3% increase in lending activity (to HK$9bn), which Hang Seng chief executive Raymond Or described as “encouraging” at the Annual CLSA Investors’ Forum in September. “If we can replicate our success story in the Mainland, that will be a significant value to our overall business,” says Patrick. He also sees a solid strategic partnership with a local bank as crucial to Hang Seng’s growing presence in the Mainland. His own role in developing that partnership has been a significant one over the past 18 months. “One of the biggest challenges I’ve had as CFO is identifying a strategic partner with a deep-rooted legacy in the Mainland’s banking sector with which to strike a good deal for the benefit of Hang Seng and the partner itself,” says Patrick. In May 2004, Hang Seng acquired 15.98% of Industrial Bank, one of the leading banks in China, for RMB1,726m. Headquartered in Fuzhou, Fujian province, Industrial Bank has 260 branches throughout the Mainland and an asset base totalling RMB260bn. When the deal was struck, Patrick was appointed executive director of Industrial Bank. “I was lucky,” he adds. Credit cards Since then, the two banks have been working on the development of a credit card business, culminating in the launch last November of a dual currency credit card bearing the Hang Seng logo and allowing holders to purchase goods within the Mainland in RMB and overseas in US dollars. Patrick, who has a seat on the management board of the credit card centre at Industrial Bank, hopes to further the credit card business, which is in its infancy. The potential is enormous: according to research conducted by McKinsey in 2003, the Chinese credit card market could generate over US$3bn in annual revenues by 2010. As Patrick notes: “This ongoing win-win co-operation with our strategic partner allows us to achieve greater shareholder value for both banks.” Despite all eyes turning towards the Mainland, Patrick points out that Hang Seng is continuing to focus on its response to customer needs in Hong Kong. In the past year, a buoyant economy in Hong Kong has fuelled the demand for new loan and wealth management products. A healthier economic environment has also given a boost to the Bank’s financial performance. In August, Hang Seng announced its half yearly results with operating income growing by 8.9% to HK$10.5bn and attributable profit at HK$6bn. Patrick points out that Hang Seng, which is the Chinese for “ever-growing”, has come a long way since the Bank’s inception in 1933, when in its first year it made HK$10,000 profit. Last year, the Bank’s bottom line hovered around the HK$11bn mark. “I would call that ever growing,” he deadpans. To some extents, Patrick’s career has followed a similar upward trajectory. From his humble beginnings as an office boy in a Big Four firm to CFO of a world-class bank, he too has gone through a journey, one that is far from over. He puts down his success thus far to integrity and ethics in performing his duties as a finance professional. “I once read that accountants are the conscience of an organisation and that phrase has stuck with me,” he says. “I’d like all accountants to remember that.” He also cites passion, optimism, and resilience as personal attributes that have ensured his commitment to his career. But it is family, in particular his mother, whom he notes encouraged him to do well and continues to influence his future, wherever that may take him. Says Patrick: “My mother was brought up in Shanghai and never had the chance to go to school. She gave me the life she never had. She had no particular career aspirations for me; she just wanted to make sure that I am an asset to this community. For what I am today, I have her to thank.”
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