A unique view from Beijing
30 May 2014
2 December 2013
17 December 2013
14 January 2014
30 October 2013
5 November 2013
Bank of Montreal’s Asia legal head reveals war stories and much more about his unique role
Two years ago a headhunter approached me. Back then I was the regional general counsel of the largest insurance company in the world. I’d been in the post for a few years, based in Hong Kong. I thought what the headhunter proposed to me was something unique and challenging. Nobody in the world had done it before.
The headhunter told me that the Bank of Montreal was setting up a brand new chief legal officer and chief compliance officer role for its Asian headquarters.
At first glance there was nothing unusual about that. But the catch was that the bank’s Asian headquarters is actually in Beijing, China. This is something unique. No other western financial institution except the Bank of Montreal has so far set up its Asian headquarters in China.
I thought about this unique opportunity, went to the interviews, got the job. I took up the challenge and moved to Beijing and began looking after the bank’s Asian business from there.
I think there was a lot of foresight for the bank’s senior management in Canada to actually set up its Asian headquarters in Beijing five years ago. Since we set up this Asian headquarters in Beijing, China has become the second-biggest economy in the world. If one wants to have a significant presence in Asia one cannot ignore the Chinese market.
Moreover, having our Asian headquarters in China means we have a lot of confidence in China. This also gives us a first mover advantage as well as having a good relationship with the regulator which is an important asset for any financial institution. Also, being well connected in China, it allows the bank to be able to get some interesting deals.
For example, in 2013 we were the investment bank handling the CNOOC/Nexen acquisition. I think one can easily come to the conclusion that having its Asian headquarters in China does give the bank certain advantages and in turn it makes my life as the chief legal officer and chief compliance officer for the bank interesting as well.
Having looked at the exciting side of the coin, my job here is not without its challenges. I very often find myself working much harder than when I was based in Hong Kong. One of the reasons is because the Hong Kong/Singapore markets are much more mature compared to that of China’s, so very often I still need to bring in the international angle/practice to the office. To be honest, I think this is why the bank brought me over from Hong Kong because my international angle and value added is something not well developed yet locally. Moreover, a lot of the work that I am doing is still at the green field stage so often I have to work down to the detail level. In my last job I had around 40 lawyers in my team who ran things in quite an auto mode. I think one may say that this aspect of my job is both interesting and challenging.
Another challenging part of my job is dealing with anti-corruption issues. Unfortunately, China is still being rated as a high risk place in terms of corruption in doing business. The recent infamous GlaxoSmithKline (GSK) bribery investigation and the JPMorgan hiring investigation are good examples of that. Canadian banks are very conservative in nature and guard their reputations very carefully. This means that on the compliance side of my job we actually spend a lot of time and effort to make sure the house is clean and we have absolutely zero tolerance of corruption.
In a way this may not be a bad thing as it allows me to sleep better at night. I understand that the general counsel for GSK China is still under house arrest and this definitely does not sound appealing to me. This is another challenging part of being in China as it is not unusual for senior executives on the ground to take personal responsibilities.
Another interesting part of my job is the regulatory work that I need to do. I have to make sure that we are always in the good books of the regulator and do not have any regulatory breaches. This means that I have to visit the regulators from time to time to get their views on us and to make sure that we are fine with them.
I have quite a bit of experience seeing regulators in India, Singapore, Indonesia, Taiwan, Hong Kong, Thailand and so on. However, the style and manner of these regulators are quite different from the Chinese ones. Most of them in China like regulators in everywhere else are still very formal but yet some are extremely relaxed and informal. This is something I have not experienced before in my previous dealing with regulators.
Having touched on the professional side, I think the story will not be completed without touching the personal side of my life here. One would always read about how bad the air quality is in Beijing. Having now lived there for a period of time, I can testify to that fact that yes it is true; the air quality is pretty bad. I remember in February this year there was about a week when you could actually see the air was coloured brown. This is pretty scary.
Another potential threat is the quality of the food in China. One always hears all these horrible stories. The Chinese even invented fake eggs which I think is quite imaginative. As a result, I choose to cook my own food most of the times (at least on the weekdays) and when I go out I would go to better quality places to at least try and reduce the health risk.
I think I can conclude that being in this unique position as the chief legal officer and chief compliance officer of the sole western financial institution having its Asian headquarters in China, my job and life here is both challenging and interesting. But I find it rewarding. Put it this way, not many people in the world have gained this unique experience, or the war stories that go with it.
Johnny K.W. Cheung, chief legal officer and chief compliance officer (Asia), Bank of Montreal Financial Group