China Minsheng Banking Corporation, one of a still rare breed of Chinese majority-held private banks, is expected to pick a successor to its ailing 87-year old chairman of the board next month. The process is being carefully watched by foreign investors and banking sector analysts. How this succession goes will say a lot about how far the Chinese banking sector has come in instituting corporate governance reforms and market-oriented approaches.
The Wall Street Journal says things have not come along that far.
"Although Minsheng bills itself as a bank run by private businesspeople, the government will get to choose who runs the lender. The 15-member board and its nominations committee will take a back seat, waiting for the government to hand down its choice."
Like Minsheng's current board chairman, the successor is likely to have close government ties in one form or another, observers say. There have been major improvements in corporate governance in Chinese banks in recent years, they agree, and the government has made it a priority for their plans to open banks to full foreign competition in December. Minsheng will be an early test case.
Minsheng and IFC recently partnered to finance energy efficiency projects. For more, see here.
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