Practicing Sustainable Financing-
Industrial Bank Once Again Teams-up with the IFC to Assist China in Energy Saving and Emission Reduction
(Beijing, February 25, 2008) Industrial Bank, the pioneer of green credit in China, signed a second-phase agreement with World Bank member the International Finance Corporation (IFC) today for renewed cooperation in the financing of energy saving and emission reduction projects. The two parties will engage in cooperation on the issue at a deeper level. According to the agreement, the IFC will provide risk-sharing loan of USD 100 million to the Industrial Bank, which will be used to support the bank in the issue RMB 1.5 billion Yuan (around USD 210 million) of loans to energy saving and emission reducing projects. It is estimated that these loans will help to cut annual CO2 emissions by over 5 million tons, which is the equivalent of closing ten 100 MW thermal power stations.
Prior to this, the first-phase of cooperation between the two parties in the financing of energy saving and emission reduction projects was a remarkable success. Under the project, the IFC provided risk-sharing loan of USD 25 million to support green credit issues by the Industrial Bank, who offered loans of RMB 900 million Yuan (around USD 126 million US dollars) to 46 energy saving and emission reduction projects in China. The vast majority of the loans were granted to small and medium scale companies, with projects supported including the renovation of industrial boilers, waste heat recovery, heat and power cogeneration and tri-generation of gas, power and cold, as well as optimization projects for power saving and industrial resources utilization. The implementation of these projects is able to reduce the emission of about 3.5 million tons of carbon dioxide and other greenhouse gases, which is the equivalent to the amount of greenhouse gases emitted by more than 210,000 taxis in one year. When considering that there are presently around 70,000 taxis in Beijing, the amount reduced is equivalent to the joint emissions of all the taxis in Beijing over three years.
Industrial Bank president Li Renjie expressed at the signing ceremony that as one of the mainstream commercial banks in China, the Industrial Bank has always placed a major emphasis on the social responsibilities of the bank, and has taken the initiative in becoming involved in and serving the cause of energy saving and environmental protection after vigorously exploring the development of sustainable finance. In cooperating with the IFC, the Industrial Bank has innovatively launched “green loans” to finance projects that will save energy and reduce emissions. The social and economic benefits of this innovation have been most pleasing. As a result, a financing model, which is sustainable, replicable and full of vitality has come about and the Industrial Bank has established its competitive edge in the field of financing for energy saving and emissions reduction. In the future, the Industrial Bank will continue to strengthen the promotion of CHUEE and make greater contributions to energy saving and emissions reduction in China by further enriching and improving the service model and creating unique client value.
Jyrki Koskelo, the vice president of the IFC in charge of the financial market, funds and African affairs, signed the cooperative agreement on behalf of the IFC. He said that the fact that the IFC had offered the Industrial Bank a risk-sharing mechanism demonstrated the strategic partnership between the two parties, and that the Industrial Bank has been highly astute in recognizing the opportunities to increase competitiveness presented by climate-change financing, and has marched at the forefront of Asian banks in this regard.
The vice president also said, “Industrial Bank executives and their teams have developed a far-reaching understanding of the future direction of the development of China's banking industry. They value prudent management, the introduction of new products and the implementation of development strategies. It is our hope to further expand cooperation with the Industrial Bank in order to help to broaden financing channels, improve individual client services and support the development of small and medium scale business in China.
Leaders from the China Banking Regulatory Commission, the Ministry of Finance and the State Administration of Environmental Protection were also present at the signing ceremony. Whilst speaking highly of the efforts made by the Industrial Bank and the IFC in support of China's energy efficiency targets, the leaders urged more financial organizations to get involved in energy saving and emission reduction so as to propel the sustainable development of communities.
Industrial Bank (IB)
Established in 1988, the Industrial Bank is a joint-stock commercial bank that has around 400 outlets and 40 branches nationwide. Moreover, the bank is the employer of over 10, 000 people across the country. The Industrial Bank is listed in the Shanghai Stock Exchange (Stock Code: 601166) and has registered capital totaling at RMB 5 billion Yuan. Up until September 30, 2007, the total assets of the bank amounted to RMB 857.615 billion Yuan whereas its stockholder value stood at RMB 36.996 billion Yuan. From January to September of 2007, the Industrial Bank reported net profits of RMB 6.024 billion Yuan. For more information about the Industrial Bank, please visit www.cib.com.cn .
International Finance Corporation (IFC)
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC's vision is that poor people have the opportunity to escape poverty and to improve their lives.
In fiscal 2007, IFC committed $8.2 billion and mobilized an additional $3.9 billion through loan participations and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information please visit www.ifc.org.
Funded by IFC, the Global Environment Facility, and the Finnish and Norwegian governments, the IFC China Utility-based Energy Efficiency Program (CHUEE) was designed by IFC at the request of China's Ministry of Finance. The goal is to lower emissions of greenhouse gases by creating a sustainable financing mechanism for investment in energy efficiency, clean energy, and emissions reduction projects. IFC offers Chinese commercial banks a facility whereby IFC shares part of the risk for all loans within the energy efficiency portfolio. IFC also provides advisory services on marketing, engineering, project development, and equipment financing services to banks, project developers, and suppliers of energy efficiency products and services. For more information, please visit www.ifc.org/chuee.