Expanding global reach: interview with ICBC's legal counsel
September 27, 2012 | BY
clpstaff &clp articles &Zhang Wei, general manager of the legal department at ICBC, talks with David Tring about his hopes for legislation in 2013 and how the bank's expanding global reach is affecting his work
What is the general structure of your bank's legal department?
The ICBC legal affairs department consists of seven business teams responsible for various functions such as legal consultancy and review, litigation management, contract management, authorisation management, and trademark registration and protection. Currently, all domestic first-level branches of ICBC have established independent legal affairs departments, while the affiliated organisations and overseas branches of ICBC have either established independent legal affairs departments or assigned full-time or part-time legal staff to manage their respective legal affairs. The legal affairs department of the head office strengthens the management of the subsidiaries' legal affairs through business authorisation, professional counselling, risk monitoring and centralised coordination. At the same time, it continuously optimises the development of consolidated risk management across the group, enhancing the integrated management for legal risks that ICBC faces.
What were some of the legislative changes to the banking and finance sector this year? How have these reforms affected you?
In June 2012, the China Banking and Regulatory Commission issued the Interim Measures for Managing Commercial Banks' Capital, which standardises many areas including the regulatory capital requirements for commercial banks, calculation of the ratio for adequate capital, definition of capital and computations of credit-risk-weighted assets, market-risk-weighted assets and operational-risk-weighted assets. The Measures also consider internal evaluation procedures to determine adequate capital for commercial banks, supervision and inspection of the ratio of adequate capital and information disclosures. The Measures are in line with the general trend in international financial regulations reform and help to further strengthen the Chinese banking industry and make it more resistant to risks. As a large banking corporation, ICBC should respond actively and enhance its capital management standards in various ways, such as transformation of operation models, adjustment of business structure and innovation in capital instruments, to ensure sustained and stable growth in all business sectors.
What is a typical day like for you working in the legal team?
The daily work of the ICBC legal affairs department consists mainly of ensuring compliance to national laws, regulations and external regulation provisions in ICBC's operations and management activities. It also consists of employing legal measures to support the international and integrated operations strategy and innovation in ICBC's various business sectors, and preventing and mitigating legal risks.
ICBC requires its branches and business departments to consult with the legal affairs department before processing business matters such as credit facilities and financial services, designing new products, developing new schemes, formulating or revising business rules and regulations and operating procedures, drafting agreement documents, signing business contracts and launching other important business campaigns. The legal affairs department also actively participates in and cooperates with ICBC's efforts to develop new products and new businesses. We learn about the status of ICBC's new businesses and new products, which improves the relevance and effectiveness of risk prevention and control measures. This also enhances sensitivity in the identification of legal risks faced by financial innovation and properly handles all types of legal issues that may arise.
In addition, the legal affairs department undertakes tasks including all litigations and arbitrations for ICBC, assistance in enforcement, outside counsel management and employs legal measures to clear non-performing assets. The legal affairs department is responsible for the registration and maintenance of all kinds of ICBC trademarks within and outside of China and for centrally managing the protection of ICBC trademarks and related intellectual property.
What are some of the qualities you look for when working with outside counsel?
Outside counsel the bank engages with should have excellent professional experience and service performance in relevant areas like financial law services. Outside counsel should also have good professional ethics and conduct, appropriate professional skills and experience. Strong communication and coordination capabilities are also essential.
What is your outlook for the forthcoming year?
ICBC hopes that the legislation and regulatory authorities will bear in mind the actual needs of the reform and development of the Chinese banking industry and formulate and promulgate relevant laws as soon as possible. These include the Regulations on Lenders to standardise private lending practices, the Regulations on Bank Cards to standardise the credit card market and Regulations on Credit Management to standardise the credit reporting business. The promulgation of these laws will significantly help the standardisation efforts for legal and compliant operations of commercial banks, improve market environments in the banking industry and strengthen the protection of financial consumers.
What is one of the biggest challenges you have had to overcome this year regarding your work?
With its international and integrated strategy progressing steadily, ICBC is growing into a multinational financial group, revolving around the banking operations of the parent company and supported by the non-banking businesses of its affiliated companies, with a presence in all major economies across the world. In the process of realising these development goals, ICBC faces increasingly complicated challenges when it comes to legal risks. These risks include the increased depth and extensiveness of legal risk exposure to multi-jurisdictional and cross-industry regulations, as well as the greater difficulties in the development of corporate governance mechanisms and channels to effectively convey shareholders' decisions arising from the complex group structure. One of the key challenges ICBC faces today is to prevent and control the legal risks that the group faces.
Interviewed by David Tring
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