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The oldest investment bank in China is a shadow of its former self. The Beijing based China International Capital Corporation or CICC, used to compete for business and talent with some of the biggest firms on Wall Street. The bank was designed to raise the profile of China and its state run companies and to attract more foreign investment. It was a symbol of the communist country's embrace of capitalism under former Chinese President Jong Zimen. But Kathy Chan, who covers Asia's investment banks for Bloomberg, says cicc's priorities have changed under new leadership, and so have its ambitions.

The oldest investment bank in China is a shadow of its former self. The Beijing based China International Capital Corporation or CICC, used to compete for business and talent with some of the biggest firms on Wall Street. The bank was designed to raise the profile of China and its state run companies and to attract more foreign investment. It was a symbol of the communist country's embrace of capitalism under former Chinese President Jong Zimen. But Kathy Chan, who covers Asia's investment banks for Bloomberg, says cicc's priorities have changed under new leadership, and so have its ambitions.

I think that internal culture has shifted from being aggressive and driven to largely complacent.

I think that internal culture has shifted from being aggressive and driven to largely complacent.

Kathy says. The firm, which once in embraced the West, is now turning inward, deepening its ties to the Chinese Communist Party.

Kathy says. The firm, which once in embraced the West, is now turning inward, deepening its ties to the Chinese Communist Party.

It was revealed that thirty percent of the staff become COMMUNSTPODIY members. Having thirty percent is pretty high number, quite an astonishing figure.

It was revealed that thirty percent of the staff become COMMUNSTPODIY members. Having thirty percent is pretty high number, quite an astonishing figure.

One of Kathy's sources told her about a recent meeting of cicc senior staff. He said they unfurled a Chinese flag and a banner with slogans by President Hixiping, the current leader of the Chinese Communist Party, and something else stood out.

One of Kathy's sources told her about a recent meeting of cicc senior staff. He said they unfurled a Chinese flag and a banner with slogans by President Hixiping, the current leader of the Chinese Communist Party, and something else stood out.

To Kathy's source, he was astonished to see a lot of people wearing the CIPPE badges. Basically, it features a rap background with a golden yellow hammer and sickle display on the left. It symbolized the party's roots and social sideas.

To Kathy's source, he was astonished to see a lot of people wearing the CIPPE badges. Basically, it features a rap background with a golden yellow hammer and sickle display on the left. It symbolized the party's roots and social sideas.

It's not something you would have seen during the bank's heyday when there were fewer party members among the cicc's ranks, and they wouldn't have advertised it. And what's happening at ci ICC could raise eyebrows among global investors who are already anxious about China's opaqueness and find the business environment difficult to navigate it.

It's not something you would have seen during the bank's heyday when there were fewer party members among the cicc's ranks, and they wouldn't have advertised it. And what's happening at ci ICC could raise eyebrows among global investors who are already anxious about China's opaqueness and find the business environment difficult to navigate it.

Basically, it tells you a liberal, restlized companies or entity in China will not go well because they will not be very much welcomed. What China wants is a company or entity that only serve the inches of the party.

Basically, it tells you a liberal, restlized companies or entity in China will not go well because they will not be very much welcomed. What China wants is a company or entity that only serve the inches of the party.

This is the Big Take Asia from Bloomberg News. I'm David Gerra. Every week we take you inside some of the world's biggest and most powerful economies and the markets tycoons and businesses that drive this ever shifting region. On today's episode, the transformation of China's oldest investment bank What that means for the future of finance in China. The story of the China International Capital Corporation begins almost thirty years ago.

This is the Big Take Asia from Bloomberg News. I'm David Gerra. Every week we take you inside some of the world's biggest and most powerful economies and the markets tycoons and businesses that drive this ever shifting region. On today's episode, the transformation of China's oldest investment bank What that means for the future of finance in China. The story of the China International Capital Corporation begins almost thirty years ago.

C SEC was created in nineteen ninety five. It was a job venture between Morgan Steane and China Construction Bank and back by other investors in Hong Kong and China.

C SEC was created in nineteen ninety five. It was a job venture between Morgan Steane and China Construction Bank and back by other investors in Hong Kong and China.

It was a new arrangement and at that time Morgan Stanley's president called it a quote landmark in China's move toward becoming a full participant in and the beneficiary of the international capital markets. The goal, Bloomberg'skathy Chan says, was to create a firm that would help Chinese companies raise money from overseas investors.

It was a new arrangement and at that time Morgan Stanley's president called it a quote landmark in China's move toward becoming a full participant in and the beneficiary of the international capital markets. The goal, Bloomberg'skathy Chan says, was to create a firm that would help Chinese companies raise money from overseas investors.

The idea is really to help all these stay owned companies in China restructure, reform and to introduce foreign investors invest into these companies.

The idea is really to help all these stay owned companies in China restructure, reform and to introduce foreign investors invest into these companies.

Of course, to do that successfully, CICC needed to hire top talent, and the bank was on the lookout for a specific type.

Of course, to do that successfully, CICC needed to hire top talent, and the bank was on the lookout for a specific type.

They actually didn't want to attract bankers from Goldman and more. In standy they only want bankers who have really good knowledge based in China about China, so they were more focusing on the Chinese who studied abroad or has the westernized minds.

They actually didn't want to attract bankers from Goldman and more. In standy they only want bankers who have really good knowledge based in China about China, so they were more focusing on the Chinese who studied abroad or has the westernized minds.

Kathy says. These people have a nickname.

Kathy says. These people have a nickname.

People who studies abroad and came back. They are called sea turtles, basically having the westernized knowledge and skills to run the firm with pretty westernized thinking.

People who studies abroad and came back. They are called sea turtles, basically having the westernized knowledge and skills to run the firm with pretty westernized thinking.

CICC was basically a startup without the name recognition of its more established peers, but as the company grew, it modeled itself after the big western banks that came before it in New York and London in the early days.

CICC was basically a startup without the name recognition of its more established peers, but as the company grew, it modeled itself after the big western banks that came before it in New York and London in the early days.

Because of the backers who have Moman Standy and also GIC behind. Definitely it was a pretty liberalized, the resonized way of managing things.

Because of the backers who have Moman Standy and also GIC behind. Definitely it was a pretty liberalized, the resonized way of managing things.

That seemed to work. CICC was competitive. It became a trusted advisor to Chinese companies and introduced them to investors who saw opportunity in China, and.

That seemed to work. CICC was competitive. It became a trusted advisor to Chinese companies and introduced them to investors who saw opportunity in China, and.

So c SCS has been making really good profit because of these valuable advice given to the Chinese companies, and they are very competitive among the global banks in China because they are the only one who knows the East and the West, and competitive in the sense that they are paying the bankers really well, sometimes better than the people the bankers get Morganistenic government is getting.

So c SCS has been making really good profit because of these valuable advice given to the Chinese companies, and they are very competitive among the global banks in China because they are the only one who knows the East and the West, and competitive in the sense that they are paying the bankers really well, sometimes better than the people the bankers get Morganistenic government is getting.

But after fifteen years, Morgan Stanley decided to pull out of the joint venture. It partnered with another local firm, China Fortune Securities company that Morgan Stanley hoped would give it more influence over management and securities. What happened when Morgan Stanley pulled out of this arrangement hasn't.

But after fifteen years, Morgan Stanley decided to pull out of the joint venture. It partnered with another local firm, China Fortune Securities company that Morgan Stanley hoped would give it more influence over management and securities. What happened when Morgan Stanley pulled out of this arrangement hasn't.

Changed much except to become more verse. The sec a profit driven company, very aggressive, even more independent from Mogenstanding, meaning they can pursue their own goos, pursue their clients strategies. I mean, they're very very China focus, and they don't have the restrictions that facing Morgan Standing or government sets. So after Monstly left, SISS to become even more prosperous.

Changed much except to become more verse. The sec a profit driven company, very aggressive, even more independent from Mogenstanding, meaning they can pursue their own goos, pursue their clients strategies. I mean, they're very very China focus, and they don't have the restrictions that facing Morgan Standing or government sets. So after Monstly left, SISS to become even more prosperous.

But then something changed. A few years ago, China's president started to signal a shift in the country's economic priorities, and he summed it up in a political slogan, Common Prosperity.

But then something changed. A few years ago, China's president started to signal a shift in the country's economic priorities, and he summed it up in a political slogan, Common Prosperity.

Common Prosperity Drive is introduced by Presidencity in Pain in twenty twenty one, The aim of that is to create an environment with a relatively eco distribution of wealth.

Common Prosperity Drive is introduced by Presidencity in Pain in twenty twenty one, The aim of that is to create an environment with a relatively eco distribution of wealth.

There is this inherent tension between communism and capitalism. They don't go hand in hand, and practically speaking, finding some kind of compromise between the two was not an easy sell to investment bankers. For those sea turtles, the water at CICC wasn't as warm as it used to be.

There is this inherent tension between communism and capitalism. They don't go hand in hand, and practically speaking, finding some kind of compromise between the two was not an easy sell to investment bankers. For those sea turtles, the water at CICC wasn't as warm as it used to be.

Being westernized meaning you are not serving the country well, meaning your priority is not the country in slot party building. Your pority is your own wealth. You're amerging your personal life. That's not the ethos of the Communist Party. So in a way that c S is a bankers if you are more of the on the western side, you're definitely feeling very awkward in the firm.

Being westernized meaning you are not serving the country well, meaning your priority is not the country in slot party building. Your pority is your own wealth. You're amerging your personal life. That's not the ethos of the Communist Party. So in a way that c S is a bankers if you are more of the on the western side, you're definitely feeling very awkward in the firm.

She's Common Prosperity Drive had a profound impact on the bank's performance, but just how did it go from being a premier investment bank to fighting for its future? That's after the BREAKA resident Xi Ximping, who's also the General Secretary of the Chinese Communist Party, rolled out his Common Prosperity Drive in twenty twenty one. Cheni Mi.

She's Common Prosperity Drive had a profound impact on the bank's performance, but just how did it go from being a premier investment bank to fighting for its future? That's after the BREAKA resident Xi Ximping, who's also the General Secretary of the Chinese Communist Party, rolled out his Common Prosperity Drive in twenty twenty one. Cheni Mi.

For then shidcly Minshenda Shiji Shintinda.

For then shidcly Minshenda Shiji Shintinda.

It was a directive intended to share a slower growing economy more equitably, and it had an outsized impact on CICC, China's oldest investment bank limit a slump in deal making. Bankers at SICC have been seeing their bonuses slashed for the past three years. Some senior bankers saw their total compensation cut by more than forty percent last year, and this April, CICC demoted some of its senior bankers and cut their base salaries even further.

It was a directive intended to share a slower growing economy more equitably, and it had an outsized impact on CICC, China's oldest investment bank limit a slump in deal making. Bankers at SICC have been seeing their bonuses slashed for the past three years. Some senior bankers saw their total compensation cut by more than forty percent last year, and this April, CICC demoted some of its senior bankers and cut their base salaries even further.

It actually happened quite slowly. On twenty Street is really the year that you've seen a lot of changes because especially after this new chairman came in from a state owned background, Galla SISK and once this new guy came in, the whole firm really changed the cultures everything. People when they see the clients, if it's as of your clients, stay on clients, they were just displayed the five star flags, you know, displaying presidency slogan, how to build a party, build a country, that sort of thing. It happened not until late last year or earlier this year.

It actually happened quite slowly. On twenty Street is really the year that you've seen a lot of changes because especially after this new chairman came in from a state owned background, Galla SISK and once this new guy came in, the whole firm really changed the cultures everything. People when they see the clients, if it's as of your clients, stay on clients, they were just displayed the five star flags, you know, displaying presidency slogan, how to build a party, build a country, that sort of thing. It happened not until late last year or earlier this year.

Can you introduce us to the chairman, the man running this company, the chairman it's.

Can you introduce us to the chairman, the man running this company, the chairman it's.

Called and he came on board in November twenty three. After he came on board, the whole firm is being kind of run by him, characterized by a lot of slogan readings and basically upholding the values of party. And he did that pretty much in every major meetings before the actual meeting starts.

Called and he came on board in November twenty three. After he came on board, the whole firm is being kind of run by him, characterized by a lot of slogan readings and basically upholding the values of party. And he did that pretty much in every major meetings before the actual meeting starts.

Kathy, we've talked about the talent that this bank could attract and compensation getting cut by by forty percent, What effects that had on the ability to a train talent, to retain talent, and also just a morale within this bank.

Kathy, we've talked about the talent that this bank could attract and compensation getting cut by by forty percent, What effects that had on the ability to a train talent, to retain talent, and also just a morale within this bank.

Definitely, they are not able to retain any talent or a tract talent, and that's why you see the morale has been bad. A lot of people I've talked to, they're basically lying flat trying to keep their job unless they find a new one. So everyone's pretty much looking for jobs elsewhere.

Definitely, they are not able to retain any talent or a tract talent, and that's why you see the morale has been bad. A lot of people I've talked to, they're basically lying flat trying to keep their job unless they find a new one. So everyone's pretty much looking for jobs elsewhere.

We reached out to CICC, but it's spokeswomen declined to comment. For those who have stayed put, almost everything about the job that could change has changed, Kathy says.

We reached out to CICC, but it's spokeswomen declined to comment. For those who have stayed put, almost everything about the job that could change has changed, Kathy says.

Bankers who are visiting SOE s stay owned companies, they will have to display the flag or the store guans to kind of make the client feels like they are on the same side. That is symbolizing unity and alignment with the party and lower down operationally, Chairman Chen is basically telling people you have to work hard for the party. We are not here to promote our self interest. So because of that change, bankers are generally thinking the hope of CSC is come and people are no longer working hard or the investment banking floors is c SC in China before six pm is really much empty. As I was told, people no longer walk long hours. They would just be there and then left early.

Bankers who are visiting SOE s stay owned companies, they will have to display the flag or the store guans to kind of make the client feels like they are on the same side. That is symbolizing unity and alignment with the party and lower down operationally, Chairman Chen is basically telling people you have to work hard for the party. We are not here to promote our self interest. So because of that change, bankers are generally thinking the hope of CSC is come and people are no longer working hard or the investment banking floors is c SC in China before six pm is really much empty. As I was told, people no longer walk long hours. They would just be there and then left early.

This is just an ethos of being a member of the party. You wouldn't pull an all night, or you wouldn't stay late, you wouldn't keep you wouldn't keep working.

This is just an ethos of being a member of the party. You wouldn't pull an all night, or you wouldn't stay late, you wouldn't keep you wouldn't keep working.

I mean the thing about if you are no longer working too for your own interest, why would you bother kind of working so hard?

I mean the thing about if you are no longer working too for your own interest, why would you bother kind of working so hard?

Kathy, you've described how there are now so many people who work at this bank who are members of the party display signs of their membership. Is it the expectation now if you work at this bank, that you do join the party, And if so, what are the potential benefits of doing that to those bankers who work at CICC.

Kathy, you've described how there are now so many people who work at this bank who are members of the party display signs of their membership. Is it the expectation now if you work at this bank, that you do join the party, And if so, what are the potential benefits of doing that to those bankers who work at CICC.

Being a party member is getting more important in this content because if you are performing and you are a party member, that means the chance of you getting promoted is higher than if you're not.

Being a party member is getting more important in this content because if you are performing and you are a party member, that means the chance of you getting promoted is higher than if you're not.

I'd love for you to situate this in the economic climate we're in right now, the business climate that we're in. This is a bank whose bread and butter is IPOs is taking companies public, and this has not been a great time for that. NOI is it looking like that's going to improve anytime soon.

I'd love for you to situate this in the economic climate we're in right now, the business climate that we're in. This is a bank whose bread and butter is IPOs is taking companies public, and this has not been a great time for that. NOI is it looking like that's going to improve anytime soon.

That's right, especially for Chinese companies selling stocks overseas. People generally don't believe that there would be a major bounds back at least this year. Although we have see more deals, we will never be able to go back to the old days. That's general thinking.

That's right, especially for Chinese companies selling stocks overseas. People generally don't believe that there would be a major bounds back at least this year. Although we have see more deals, we will never be able to go back to the old days. That's general thinking.

The grim mood is reflected in cicc's stock price, which is almost half what it was two years ago. Profits and revenue have declined, and the bank has been losing market share. You almost have to squint to see the original CICC at this point, and Kathy says the firm's future looks very, very different.

The grim mood is reflected in cicc's stock price, which is almost half what it was two years ago. Profits and revenue have declined, and the bank has been losing market share. You almost have to squint to see the original CICC at this point, and Kathy says the firm's future looks very, very different.

We have a professor in Hong Kong basically thinking CSEC wild disappear. The future of c SC would be very much the same as the future of other state owned brokeages in China. There to serve the country. The international clients' investors will not be their major focused clientele.

We have a professor in Hong Kong basically thinking CSEC wild disappear. The future of c SC would be very much the same as the future of other state owned brokeages in China. There to serve the country. The international clients' investors will not be their major focused clientele.

All of this has signaled the end of what was an ambitious experiment back in nineteen ninety five when CICC was started.

All of this has signaled the end of what was an ambitious experiment back in nineteen ninety five when CICC was started.

The bands itself not disappear, but the culture of the band, the original access to the band, will disappear eventually. That means for the global bands, I mean they will see a disappearance of a strong competitor that they used to face when it comes to China deals.

The bands itself not disappear, but the culture of the band, the original access to the band, will disappear eventually. That means for the global bands, I mean they will see a disappearance of a strong competitor that they used to face when it comes to China deals.

For global investors who are watching cicc's cultural and ideological transformation, Kathy says, there's a lesson here.

For global investors who are watching cicc's cultural and ideological transformation, Kathy says, there's a lesson here.

I think China doesn't really want to be seen as converting the foreign firms into a CCP entity, and that propervier will scare a lot of investors. Not yet, but if you are based in China, if you have to deal with the local governments and regulators more for business purposes, you Papyria want to be seen as more China like rather than very Westernized or very you as like.

I think China doesn't really want to be seen as converting the foreign firms into a CCP entity, and that propervier will scare a lot of investors. Not yet, but if you are based in China, if you have to deal with the local governments and regulators more for business purposes, you Papyria want to be seen as more China like rather than very Westernized or very you as like.

This is the big take Asia from Bloomberg News. I'm David Gerre. This episode was produced by Young, Young, Naomi, Jessica Beec and Ariana Tapia. It was edited by Aaron Edwards and Jonas Bergmann. It was mixed by Rishi Pajacol. It was fact checked by Naomi and Young. Our senior producers are Naomi Shavin and Kim Gittleson. We get editorial direction from Elizabeth Ponso. Nicole Beemster Boor is our executive producer. Sage Bauman is Bloomberg's head of podcasts. Thanks for listening. Please follow and review The Big Take wherever you listen to podcasts. It helps new listeners find the show. We'll see you next time.

This is the big take Asia from Bloomberg News. I'm David Gerre. This episode was produced by Young, Young, Naomi, Jessica Beec and Ariana Tapia. It was edited by Aaron Edwards and Jonas Bergmann. It was mixed by Rishi Pajacol. It was fact checked by Naomi and Young. Our senior producers are Naomi Shavin and Kim Gittleson. We get editorial direction from Elizabeth Ponso. Nicole Beemster Boor is our executive producer. Sage Bauman is Bloomberg's head of podcasts. Thanks for listening. Please follow and review The Big Take wherever you listen to podcasts. It helps new listeners find the show. We'll see you next time.