China has a big headache bashing Citic Securities with CLSA, instead of getting its own version of Goldman Sachs
- Citic Securities has been hit by more than 50 resignations since January, threatening to upend China’s push to create a global investment banking powerhouse
- Citic Securities’ revenue in fixed income this year through May was just US$20.7 million, 55 per cent below budget
The man tasked with building a Goldman Sachs for Communist China was done playing nice.
With hundreds of staff gathered to hear him speak at the Beijing Four Seasons Hotel in January, Citic Securities Chairman Zhang Youjun called out leaders of his firm’s international unit by name and questioned their ability to earn a decent return on capital. In a room full of investment bankers, it amounted to a stunning rebuke.
For the executives at Citic’s CLSA unit who sat listening to Zhang in silence, it also marked the end of a tumultuous three-year relationship. Nearly all of them would quit over the next few weeks, kicking off a wave of more than 50 resignations that now threatens to upend China’s push to create a global investment-banking powerhouse.
The story behind the exodus – pieced together from interviews with almost a dozen current and former executives who asked not to be named so they could speak freely – illustrates the difficulties China faces as it tries to project its financial might abroad.
It involves bruised egos, lost bonuses and a culture clash that some say was inevitable after Citic Securities bought CLSA six years ago, putting the freewheeling Hong Kong institution in the hands of a state-owned giant that ultimately answers to China’s Communist Party.
“It was only a matter of time before this was going to happen,” said Paul Schulte, the Singapore-based founder of Schulte Research and former senior adviser to CCB International, the overseas unit of a state-owned Chinese bank. “I’m shocked it took this long.”
