Bank of China’s credit risk chief quits, say reports

Lonnie Dounn, the Bank of China’s credit risk chief, resigned in April, slightly more than a year after he was appointed, according to Hong Kong’s English daily South China Morning Post ( SCMP ).

Dounn, an American by birth, had joined BOC in February 2005 from HSBC, where he was the chief credit officer for Asia-Pacifc from 1998 to 2004.

BOC officials declined to comment about Dounn’s apparent departure, nor talk about plans to replace him. But sources who knew him reportedly told the SCMP that it was due to his inability to adapt to the culture in a Chinese bank. The problem was also magnified by his inability to speak Mandarin, the working language in China.

Dounn had also admitted in an SCMP interview last September that he faced a steep learning curve of the mainland banking system and the BOC.

Meanwhile, the situation highlights ongoing concerns about risk management practices in Chinese banks. “Investors remain very focused on the credit risk issue and clearly China has some way to go to demonstrate that the changes made can help,” says one banking analyst. “In my view, credit risk culture evolves, and we will not really know how effective changes are until they are stressed by difficult economic times or industry issues.”

The BOC has been making daily headlines recently for raising US$9.7 billion in its Hong Kong initial public offering, the largest in the last six years.