Money Machine

Chapter 18Mariana Trench to Mount Everest

Despite a substantial improvement in the operations and profitability of the bank under our care and Newman's able leadership, SDB remained undercapitalized. Capital was the bottleneck to SDB's growth and transformation. It felt like we had fixed the rudder and restarted the engine, but we could not run our vessel at full steam for lack of fuel. The CSRC still would not approve SDB's capital‐raising plans until the bank had completed its share reforms. The proposed deal with PAIG would have solved that problem once and for all, but, by almost a freak accident, that was gone, for good. We were back to dealing with tradable shareholders whose make up was constantly changing, because the stock changed hands every day. But we knew what they wanted: a rising share price, or the prospect of a “gift” from LP shareholders. Without share reforms, neither purpose could be achieved.

A team consisting of senior SDB and Newbridge officers had already spent an incalculable amount of time on this issue. Xiao Suining, who had succeeded Wang Ji as Shenzhen's chief negotiator during our deal, had retired as chief of the Shenzhen branch of the Bank of Communications. We invited him to join SDB as president. He had impressed us as a tough negotiator but also a man of integrity, principle, and deep knowledge in banking, just the type of person we needed. After he came on board, he and I led a team to visit with major tradable shareholders in the hope of ...