China: Three decades, six leaders – Wang Dongming
Wang Dongming was the first of his kind in China. The 68-year-old rose to global attention in 2013 when Citic Securities, the mainland brokerage he chaired, bought CLSA from France’s Crédit Agricole.
The deal was a costly one, pricing the Hong Kong firm at double its book value. But Wang saw the deal through different eyes. CLSA was an unconventional upstart with a great research team and a solid international distribution network, and he viewed Citic’s buy-side presence and CLSA’s sell-side business as a perfect match.
Wang wanted to transform Citic into a global player on a par with the big Wall Street investment banks. Ever since joining the brokerage in 1995, his cherished dream was to build China’s version of Goldman Sachs. He wanted it so badly, he was willing to jump at almost any opportunity. An attempt to invest $1 billion in Bear Stearns in 2007 fell through shortly before the US broker’s collapse – thus saving Citic from a considerable loss and sparing Wang the censure that he would surely have earned in Beijing.
Aware of the challenge he faced in jamming together a po-faced state firm wary of innovation and a free-wheeling outfit with more than a touch of the old Wild East about it, Wang invited Jonathan Slone up to Beijing, soon after cutting the deal, to give a presentation to Citic’s board.
Slone, who was CLSA’s chief executive at the time, gave a wide-ranging speech that covered everything from falling commission rates to new European Markets in Financial Instruments Directive rules and a fragmenting US market.
“I walked out afterward and asked Wang if any of the guys in the room knew what I was talking about,” Slone tells Asiamoney. “He replied: ‘No. It will take another generation for that to happen’.”
The merger of unequals should have been the start of something great, yet it turned out to be a coda. Citic struggled to absorb CLSA or understand its operating model, and resented the generous bonuses it paid its staff, while the Hong Kong firm in turn chafed at a throttling new owner.
When it came, Wang’s fall from grace was swift and brutal. In June 2015, Citic raised $5 billion from two private share placements, then watched aghast as China’s stock market crashed. Over the next month, nearly $5 trillion in stock gains were wiped out, while the Shanghai Stock Exchange lost a third of its value.
China’s big brokerages were in Beijing’s cross hairs – and few were spared. Seven senior Citic officials, including the group’s general manager, were arrested and accused of insider trading. Wang was spared jail, in view of his age, but was encouraged to step aside. In November of that year he departed, reluctantly.
Citic reacted by returning to its roots and reining in its errant foreign unit. In January 2019, it revisited the M&A market, buying Guangzhou Securities, a smaller domestic rival, with 42 branches scattered across southern China.
Two months later, a trio of senior CLSA officials, including Slone, chairman Tang Zhenyi and chief operating officer Nigel Beattie, all departed. Chief strategist Christopher Wood left in May to become the new global head of equity strategy at US investment bank Jefferies.
Wang quietly drifted away from public view. In truth, he was probably a man out of time. Had he been born in 1981, instead of 1951, he would quite likely have gone to work for a Wall Street firm – perhaps even the one he sought so desperately to emulate. After all, he was a natural dealmaker, described by Slone as “a fantastic, crazy great visionary, a pioneer who took a mediocre brokerage to the top of the pile”.
Instead the genial Georgetown graduate, who was among the first generation of mainlanders to study abroad and whose father had worked for Chairman Mao’s urbane premier Zhou Enlai, went to work for an archly conservative mainland brokerage and tried to transform it from within.
Yes, Wang stumbled and fell, but precious few would have dared to try.