Summary of Key Points
The logic behind bank executives' selection has recently changed: in the past, banks preferred candidates with a credit background and expertise in lending and risk management. However, nowadays, there is a growing trend towards appointing managers with experience in investment banking, asset management, or wealth management. Figures such as Gao Zengyin from Jiangsu Bank, Wang Xiaoqing from China Merchants Bank, and Lü Tiangui from CITIC Bank exemplify this shift. This change reflects the transformation of the banking industry's profit model. Relying solely on interest margins from lending is becoming increasingly challenging, so banks need to develop low-capital-intensive businesses such as wealth management and investment banking underwriting to offset these pressures. As a result, they require executives who understand these new areas to guide their strategic direction.
Why Don't Banks Choose "Lending Experts" as CEOs?
The industry landscape has changed dramatically over the past 20 years. Once, banks could easily make money by lending—the larger the loan volume, the greater the interest margin (the difference between loan and deposit rates). However, the situation is now reversed:
- Narrowing Interest Margins: Continuous interest rate cuts have reduced the interest rates on both corporate and personal loans, resulting in smaller profit margins for banks.
- Challenging Credit Environment: Residents are less inclined to buy homes (decreasing mortgage demand), and local platforms and real estate loans carry higher risks, making it difficult to secure high-return loans.
- Increased Capital Pressure: Lending requires banks to use their own capital, and regulatory requirements are becoming stricter. Expanding lending quickly depletes capital, forcing banks to frequently seek financing.
Executives with a pure credit background tend to focus on lending and may struggle to address the current profit and capital challenges. In contrast, investment banking and asset management are low-capital-intensive businesses that generate revenue through service fees (e.g., charging for helping companies issue bonds or managing assets), which can compensate for declining interest margins. Therefore, banks need executives with expertise in these areas to lead them.
Jiangsu Bank's Appointment of Gao Zengyin is No Coincidence—His Asset Management Skills Are Outstanding
Gao Zengyin's selection is due to his strong capabilities in investment banking and asset management:
- Success at Su Yin Financial Management: He built Su Yin Financial Management from scratch, and by the first quarter of 2026, its assets exceeded 840 billion yuan, making it the only city commercial bank's wealth management subsidiary with over 800 billion yuan in assets, outpacing its competitors by 140 billion yuan and growing at a faster rate than the industry average.
- Innovative "Investment Banking-Driven Asset Management" Model: While other companies seek assets (e.g., buying bonds or non-standard assets), Gao Zengyin reversed this approach. He first helped companies create high-quality assets (such as bonds and ABS) using investment banking services, then used customer funds to purchase these assets, creating a sustainable and profitable model.
- Young and Market-Savvy: At 49, he is more familiar with the capital market dynamics than other vice presidents, which aligns with the bank's transformation needs.
Compared to Vice President Ding Zonghong, who focuses on corporate lending (a more suitable background for the current 70% of corporate loan portfolio), Gao Zengyin's asset management expertise is better suited to help the bank break free from its reliance on interest margins.
How Will Jiangsu Bank Change Under the New Management?
The new team (Chairman Yuan Jun focusing on credit and CEO Gao Zengyin on transformation) will prioritize low-capital-intensive businesses:
1. Greater Emphasis on Wealth Management: Su Yin Financial Management is a key asset, and more resources will be invested to make management fees and sales commissions stable sources of income.
2. Improving Retail Wealth Services: Jiangsu Bank's fund sales volume is low (only 130 billion yuan in equity funds), so Gao Zengyin will allocate resources and marketing efforts to wealth management, funds, and insurance products to attract high-net-worth customers.
3. Shift from Pure Lending to Comprehensive Services: The bank will provide a range of services beyond just lending, such as bond underwriting, mergers and acquisitions financing, and industrial funds, especially for tech startups.
While the bank will not abandon its core credit business, it will optimize its structure by reducing inefficient government-backed loans and focusing on manufacturing, technology innovation, and green sectors.
Will Executives with Asset Management Background Become the New Trend?
Not all banks will follow this trend; there will be a differentiation:
- Banks That Will Follow: Leading stock banks (e.g., China Merchants Bank) and top city commercial banks (e.g., Jiangsu Bank), which face significant interest margin pressures and have the necessary capabilities and customer bases for low-capital-intensive services.
- Banks That Won't Follow:
- Large state-owned banks, whose primary mission is to support national infrastructure and provide inclusive credit; asset management is secondary.
- Small rural and commercial banks that rely on local loans and lack the resources or customer base for low-capital-intensive services.
However, several trends are inevitable:
- The selection of bank CEOs is shifting from focusing on lending skills to more comprehensive qualifications.
- Executives born in the 1970s and 1980s with asset management and investment banking experience will be more sought after.
- Banks are evolving into "comprehensive financial service providers," meeting the growing needs of businesses (for bonds, mergers and acquisitions) and individuals (for asset allocation).
The Big Change Behind This: A Fundamental Shift in How Banks Make Money
The change in CEO selection reflects a shift in the banking industry from focusing on scale expansion to improving quality:
- Profit Model: Moving from relying solely on interest margins to combining interest margins with intermediate business services.
- Bank Role: Changing from being mere loan intermediaries to providing comprehensive capital services throughout the entire business cycle.
- Core Competencies: Shifting from risk management and lending to cross-business collaboration (including wealth management, investment banking, and funds).
While credit will always be a fundamental part of banking, it is no longer the sole driver of growth. In the future, banks will compete based on their ability to use low-capital-intensive services to meet customers' diverse needs while generating stable service fees.
In Summary: The change in bank CEO selection is a necessary response to low interest rates and capital constraints. Banks must adapt by offering comprehensive services rather than relying solely on lending to generate profits.