According to the latest "Top 1000 World Banks" released by the British magazine, The Banker, Industrial Bank ranked 297th with yearly advance of 28 positions in terms of tier 1 capital, and ranked 164th with yearly advance of 46 positions in terms of total assets. In recent years, the list has seen Industrial Bank developing as one of the domestic banks with fastest growth. As a comprehensive bank, the bank has greatly impressed the financial industry by its "Pragmatic Style, Professional Dedication, Pioneering Spirit and Group Cohesion".
At present, contending for small and medium-sized enterprises market has been ready to take off among each bank. Facing the circumstance and on the basis of market demand and realities of self-situation, Industrial Bank brought out its objectives for small and medium-sized enterprises market after in-depth research and full preparation. That were to cultivate 20 thousand high-grade clients and increase RMB 300 billion high-quality credit assets on small and medium-sized enterprises market by the year of 2010; to strike a shining pose on domestic small and medium-sized enterprises market in April this year by activating experimental operation of financial service facing small and medium-sized enterprises.
Brewing Stage
July 2005, Industrial Bank held seminar of financial service for small and medium-sized enterprises in Hangzhou. Experts from each branch who specialized in corporate banking business got together and reached a consensus on the importance and urgency of greatly developing the small and medium-sized enterprises market.
After the seminar, Industrial Bank immediately set up the research group to study financial service for small and medium-sized enterprises. The group did field research for the financial demand and service pattern of small and medium-sized enterprises in Yangtze River Delta, Pearl River Delta and the triangular area in south Fujian comprising Xiamen, Zhangzhou and Quanzhou. Through varied researching methods (interview, seminar, and spot check) and consultation from diversified resources (clients, financial institutions and regulatory authorities), the research group collected more than 120 innovative suggestions successively. The blue print of experimental operation began to emerge after day-after-day screening processes.
March 2006, Industrial Bank officially unveiled its fresh policy of "Carrying out Experimental Operation of Financial Service for Small and Medium-Sized Enterprises" to launch the experimental operation project of financial service for small and medium-sized enterprises. The experimental operation project covered several aspects including suggestions on promoting experimental operation, measures for credit business management, evaluation criteria of credit rating, loan pricing model, and credit accountability system. From April 1, 2006, the experimental operation has been carried out firstly in Hangzhou Guangzhou, Nanjing, Ningbo, Quanzhou and Zhangzhou branches.
Cultivating Stage
Training results in productivity boost! In order to establish a platform for experimental operation, Industrial Bank carried out training program successively in 6 experimental branches. The trainees covered professional people such as the heads of branches and business development departments, customer service managers, risk management managers and credit management managers. The training matters involved the work flow of credit business, evaluation criteria of credit rating, loan pricing model and so on. All the trainees should pass the qualification examination arranged by the head office to get access to their positions.
For the sake of jointly promoting the experimental operation, corporate banking department in head office set up a liaison system between the head office and the experimental branches. Each liaison will tail the operating situation of corresponding branch to acquire real time information, answer questions and analyze the suitability of each move promoted by experimental operation project. All these were made in the bid to meliorate and promote the experimental operation project.
In order to improve the allocation efficiency of credit assets, Industrial Bank furthered the research on small and medium-sized enterprises cluster according to their area distribution character and industrial distribution character. A project team was set up to carry out the research on micro- enterprise, and the work flow and operation process of credit business were also tailored to meet the need of featured small enterprises cluster in Putian, Ningde, Nanping, Sanming, Longyan cities, where the small enterprises were densely distributed.
Executing Stage
Reconstruct management system, enhance organizational support:
In order to enhance the research, professional operation and centralized management of small and medium-sized enterprises market, Industrial Bank established corresponding and specialized marketing management department in head office, branch and sub-branch respectively, and set up a professional team comprising customer service managers and credit management managers according to certain proportion. Every professional customer service manager and credit management manager should pass the qualification examination on credit business for small and medium-size enterprises to get access to their positions.
Formulate credit policy, improve decision-making efficiency:
Through in-depth and thorough research, Industrial Bank segmented the small and medium-sized enterprises according to their growth cycle, which detailed in introduction period, growing period and maturity period, and defined the scale of target clients, main credit-supporting target, and criteria of voluntary market exit in line with self service capacity, risk control ability, bargaining power and the reality of experimental area. Differentiated credit approving and trans-approving system were set up in combination with small and medium-sized enterprises' discrepant economic surroundings, credit environment and risk management power in experimental area. Taking into account the financing characteristics that featured “small amount, frequent application and urgent need”, timing management system was applied to improve the credit-approving efficiency for small and medium-sized enterprises.
Upgrade operational tools, improve professional level:
Industrial Bank designed the loan-survey report template, credit approving form and credit-rating evaluation form that particular for small and medium-sized enterprises. Centering on verifying the assets authenticity and operation facticity of each enterprise, these tools helped enhance the collection and analysis of enterprises' public information such as tax statement, water bill payment and electricity bill payment; increase the weight of qualitative indexes that reflect operators' status in credit-rating evaluation; simplify the items of credit approving; indicate some key risk-precaution information after credit issuing, which covered operation status of borrowers, guarantee power of warrantor and market value change of pledged items. Moreover, by referring to international advanced experience, adopting economic quantitive methods and tools, considering factors as risk, overall benefit, customer loyalty, and peer competition situation etc., Industrial Bank also launched a self-developed loan pricing model for small and medium-sized enterprises to realize automatic pricing for each loan business.
Optimize work flow, strengthen risk control:
From inner operation aspect, both chief and assistant customer managers will be in charge of the investigation process before credit-issuing, will offer opinions of investigation independently, and will be responsible for the authenticity of the investigation report and the offered investigation opinions. Before credit-issuing process, functionary of credit-issuing section will meet the main operators of clients and do field investigation if necessary. During the verifying process of credit-issuing, specialized post was set up to check the credit application from small and medium-sized enterprises. After credit-issuing process, dual-line system will be applied to check the performance of small and medium-sized enterprises. That is, besides the monthly check by customer managers, risk management department of branch office should also arrange specialized people to make spot-check aiming at new credited small and medium-sized enterprises for the year. The proportion of spot-check should not be lower than 10% of total credited clients.
Accelerate product innovation, upgrade service competence:
Aiming at the financing characteristics that the small and medium-sized enterprises possess in production, purchase and distribution processes, Industrial Bank developed featured financial products that combined closely to the cash flow and logistic flow of small and medium-sized enterprises. Cooperating with experimental operation, Industrial Bank upgraded the service connotation of corporate banking brand "Fortune Wise", and launched financial service solution "Golden Sesame" for small and medium-sized enterprises, which covered 3 main circulating processes (production, purchase and distribution), and included 8 financial service schemes focusing on low-cost purchase, purchase financing, purchase expansion, express reflow of fund, sales expansion, bad debt avoidance, temporary fund lack and venture capital investment. In virtue of convenient products as chattel pledge, work plant mortgage, discount on commercial acceptance draft, pledge against commercial acceptance draft, T/T against credit line, and factoring financing, the solution solved "8 financing problems" that had baffled small and medium-sized enterprises in one package.
Perfect performance evaluation system, promote incentive mechanism:
For credit business with small and medium-sized enterprises, Industrial Bank provided policy support to aspects like allocation of economic capital, distribution of achievements-related wages, special fund for loan, and expenses produced by matrix operation. The weight of economic capital occupation will be reduced for financing to qualified small and medium-sized enterprises; the extra achievements-related wages will be distributed according to certain proportion of small and medium-sized enterprises' simulation profit; and the identifier of small and medium-sized enterprises will be started to use in the credit management information system. Five indexes of small and medium-sized enterprises, the number of newly credited clients, settlement volume of clients, number of transactions, interest collection ratio of each RMB 10,000 loan, and NPL rate, will be adopted in the separated performance evaluation and differentiated control of experimental branches. These moves are carried out in bid to encourage units and individuals that achieve outstanding performance in financial service for small and medium-sized enterprises.
Establish accountability mechanism, intensify work post responsibility:
Accountability mechanism to tail the responsibility of customer service manager and risk management manager was built in experimental branches to restrict employees' conduct on credit business. Once the conduct was ascertained to be inappropriate, no matter whether it had brought actual credit risk, it should be investigated for responsibilities according to the serious level of the conduct and the consequence it had caused. This helped form sound risk-control culture.
Innovating financial service pattern for and greatly expanding client base of small and medium-sized enterprises are Industrial Bank's inner demands for surviving in austere peer competition and endeavoring to higher level sustainable development. In face of the reality of immature credit environment around domestic small and medium-sized enterprises, Industrial Bank always holds the belief that competence speaks louder. Industrial Bank deeply believes that by insisting on improving its risk-distinguish ability and professional service power, by adhering to foster a unique service brand facing small and medium-sized enterprises, mutual development and mutual growth between the bank and small and medium-sized enterprises will be achieved.
It was learned that since the beginning of experimental operation, the number of qualified small and medium-sized enterprises in 6 experimental branches has amounted to 3456; the balance of loan outstanding has achieved RMB 15.684 billion; and the total settlement volume has hit RMB 22.284 billion by the end of June, 2006……