According to China Economic Weekly: In November last year, Wenzhou businessman Lin Chunping bought an American bank. This bank, which was later renamed "New HSBC", began trial operations on November 11, 2011. This marked a breakthrough after a decade of unsuccessful attempts by Wenzhou's private capital in the financial sector. It is also a bitter choice made after Wenzhou’s private capital encountered policy barriers when trying to enter the banking industry domestically.
Lin Chunping invested less than 4 billion yuan (approximately 600 million USD) to acquire the Atlantic Bank. Lin Chunping, 42 years old, told reporters that he is from Xiaoshiyang Village, Xianxi Township, Ouha District, Wenzhou. He has over 20 years of experience traveling and running businesses in Western countries, obtaining dual master's degrees in economics and financial law in countries like Singapore. He is well-versed in the rules of the European and American financial sectors. According to additional information, Lin Chunping has been married twice, and his current wife is the head of the credit department at a branch of Minsheng Bank in Wenzhou.
"I have long wanted to get involved in the financial industry, but domestic policies did not allow it. Fortunately, my business and activities are mainly overseas, so I have always been looking for opportunities abroad," Lin Chunping said. "Before 2008, the banking industry in Europe and America was flourishing, but my financial strength was insufficient. The opportunity arose after the subprime crisis in September 2008."
"In early 2009, I learned by chance that the Atlantic Bank in the United States had filed for bankruptcy. At that time, my businesses in West Africa (mining) and Singapore (re-export trade) were running smoothly. Hearing this news, I became very interested, so I found a few lawyers who understood the situation and went to investigate on-site and started contacting them," Lin Chunping recalled.
Lin Chunping said that the controlling party of the American Atlantic Bank was then indebted to the tune of $2 billion, already insolvent, and their initial asking price was $600 million. "Fortunately, at that time, the bank was already insolvent, and the Delaware state government was eager to revitalize it. Thus, I gained leverage in the negotiation. The final agreed-upon price was $60 million, but it took us more than two years."
In June 2011, Lin Chunping successfully acquired the American Atlantic Bank in Delaware. On November 11, it was renamed New HSBC and began trial operations. Lin Chunping said that "November 11, 2011" was a date he carefully chose, with "six ones" symbolizing the concept of perpetual business management.
The Banking Dream of Wenzhou Entrepreneurs
Zhou Dewen, president of the Wenzhou Small and Medium Enterprises Promotion Association, told reporters that efforts by Wenzhou's private capital to use repatriated overseas Chinese funds to establish the Wenzhou Overseas Chinese Bank domestically have been ongoing for 10 years.
The idea of establishing the Wenzhou Overseas Chinese Bank was first proposed in 2006. However, the response from the Wenzhou Supervision Bureau of the China Banking Regulatory Commission that year was that "the timing was not yet ripe."
On August 23, 2010, Chen Guohua, president of the Wenzhou Huashang Association and chairman of Zhejiang Nuoluo Radiator Co., Ltd., along with Wang Yiniao, president of the Wenzhou Overseas Chinese Businessmen Association and chairman of Zhejiang Kang'erda New Materials Co., Ltd., jointly submitted a report again to the State Council requesting the establishment of the Wenzhou Overseas Chinese Bank.
Zhou Dewen said that this application was submitted in late August 2010 and received a response from the State Council only in late October 2011, with the result being that the application was rejected without any reasons given. Zhou Dewen analyzed the reasons and said, "The problem is not that the threshold is high; the regulatory departments do not even tell us where the threshold lies or which conditions we failed to meet, but they just refuse to let us in."
Since the outbreak of the financial crisis in 2008, the desire of Wenzhou's private capital has become stronger. The reason lies in the lack of derivative channels for Wenzhou's surplus private capital. The worsening business and policy environment has not only led to industrial hollowing out but has also made this part of the capital more eager to find ways to increase its value.
Can New HSBC Promote the Liberalization of Financial Controls?
On the day the reporter rushed to Wenzhou, Zhejiang Vice Governor and Secretary of the Wenzhou Municipal Committee, Chen Derong, revealed at the "World Wenzhou Business Conference" that the comprehensive financial reform plan for Wenzhou had been submitted. According to procedures, the plan is currently under review by the People's Bank of China, soliciting opinions from relevant ministries, and will soon enter the State Council approval process.
Under the premise that there are still no signs of openness in domestic financial policies towards private capital, Lin Chunping's New HSBC may become a benchmark for Wenzhou's private enterprises to emulate. However, if this happens, the outflow of Wenzhou's private capital will become even more intense. Promoting the liberalization of restrictions on private capital...