Industrial Bank Serves the Leaping Development of the West Straits
On March 22, Industrial Bank (IB) announced in a press release held in Fuzhou the promulgation of Opinions on the Active Implementation of Financial Innovation to Fully Serve the “Five Campaigns” of West Straits. By pushing forward “seven innovations” to accelerate the “five campaigns” of Fujian , IB intends to improve its financial productivity, employ the guaranteeing role of finance and fully get involved in and serve the scientific and leaping development of the West Straits. This is another major measure of IB following its launched of the “Multi-Billion Program for Advancing Six Major Projects” in the West Straits, It is also an innovative measure to implement the Key Tasks of Finance to Serve the Scientific and Leaping Development of Fujian in 2011 jointly formulated by the Fuzhou Central Sub-branch of the People's Bank of China, Fujian Banking Regulatory Commission and other institutions.
IB indicated that the “five campaigns” of West Straits are strategic choices of Fujian for a new round of development. They are work priorities at the beginning of the year and serve as the development engine of the “12th Five-year Plan”, each of them being an emphasis and cornerstone for the overall development of Fujian in the future. As the only listed national bank located in the West Straits, IB has always seen it as its own duty to serve the leaping development of the area, and will continue its leading role in financial services in the West Straits. Being established as a work priority of the year, to serve and support the “five campaigns”, the Bank will tightly grasp the opportunity to develop its diversified emerging financing business and provide strong financial support to the “five campaigns” by clustering financial resources at its Head Office to increase capital supply in an active, responsible, innovative and pioneering manner.
It is reported that, centering on the special work priority to provide comprehensive services to the “five campaigns” throughout the year, IB will safeguard the construction of major projects by way of a “sand table operation”. By now, the bank has prepared the “sand table for projects covered in the five campaigns of West Straits”, planned to arrange a fund of more than RMB 30 billion to support the construction of 241 major projects covered in the “five campaigns”. In order to meet the capital need for constructing the major projects in the “five campaigns”, the bank will also fully apply diversified financing instruments to drive forward business innovation, increase financial service products and extend financing channels and sources in seven key business fields: direct financing services, lease finance services, green finance, supply chain finance, entire-industrial chain services for urbanization, IPOs of SMEs, and asset business cooperation.
Make innovations in direct financing services and extending the financing channels of key enterprises and superior projects in a comprehensive way
IB will, depending on the functions of its investment banking business, focus on applying the direct financing model, including debt financing, equity financing, structured financing, etc., in key enterprises of the Fujian Province and construction projects of the “five campaigns”. Firstly, the bank will explore and promote the development and use of innovative debt financing instruments, such as Credit Promotion Notes and non-public directional financing instruments, and try to reach the debt financing amount of the “five campaigns”- over RMB 4.5 billion. Secondly, vigorously drive Fujian enterprises towards seeking financing via IPO and listed companies to seek re-financing, and through establishing a business cooperation platform, introduce private a equity investment fund, industrial investment fund, and venture capital fund from other provinces and other countries to enterprises in the West Straits to enlarge the equity investment scale. And thirdly, actively promote enterprises to issue structured financing products depending on their equity and usufruct or relying on multiple debts including accounts receivable, usufruct, etc., to further widen the financing channels of enterprises.
Make innovations in the financing model of lease financing and employ diversified operation functions to transfer capital and serve the five campaigns in a large scale manner
IB will fully utilize the role of its solely owned subsidiary – Industrial Bank Lease Finance Co., Ltd. and plans to invest RMB 19 billion through lease finance to meet the capital need of the “five campaigns” as a priority and serve the five key fields. Firstly, the bank will take the direct leasing of medium-term and long-term fixed assets and enabling the leaseback of existing fixed assets as important breakthrough points, design appropriate product and trading structures and to support the campaign for constructing the key projects. Secondly, take the leasing of operating properties as a breakthrough point, push forward the construction and transformation of standard workshops and centralized markets to support the campaign of creating an attractive environment for potential investors in the new growth area. Thirdly, take the lease finance business of urban utilities with stable periodic incomes and cash flows as a breakthrough point, and serve the urban construction campaign. Fourthly, take the leasing business of equipment suppliers to help the manufacturing industry, primary manufacturers and downstream and upstream enterprises in the province to grow bigger and stronger. Lastly, take the lease finance business of affordable housing as a breakthrough point to purchase affordable housing to lease them to the government or organizations and establish them for leasing to mitigate the insufficiency in capital for constructing affordable housing and to serve the campaign of livelihood projects.
Innovation in green financial credit products to directly provide special supply funds to the five campaigns
As the first “Equator Bank” and a pioneer and promoter of green finance in China, IB will bring into play its advantages in technology and resources, focusing on promoting the application of products such as carbon capital pledge-based credit extensions, emissions right mortgage-based credit extensions, and carbon purchase (sale) agent across the Fujian Province and further extending the application fields for energy conservation and emissions reduction based construction loans and technical transformation loans. The bank has arranged special green financial credit amounting to RMB 10 billion to give preferential support to the development of green financial businesses in the “five campaigns”, and plans to register an annual growth rate of 50% in green financial loans for the West Straits to fully push forward the technical improvement of conventional sectors and scale development of the green economy.
Innovation in supply chain network services to reduce occupied capital in the industrial chain and construction chain
IB will mainly construct the financial service network for supply chains and focus on driving the combined application of innovative products, such as financial instruments, account receivable pool based financing, purchase order financing, goods control based financing, domestic factoring, and internal guarantee based external loans, to vigorously accelerate the fund flow rate in economic networks such as industrial chains, construction associated parties, and group affiliated enterprises, and reduce the overall amount of occupied capital and the capital demands. IB intends to establish a financial service network for supply chains mainly in the following fields of the “five campaigns”: regional industry clusters, construction unit associated parties, Fujian and Taiwan connected industries, bulk commodity distribution centers, etc.
Innovation in entire-industrial chains for urbanization to drive versatile financing via extended financial services
Focusing on the urbanization construction project concerning the livelihood of people, such as, urban infrastructure construction, and transformation of derelict towns, old factories and old towns, IB will focus on forging “all-flow and all-sector financial services” to be involved in the project planning, design and sourcing of project establishment and to assist project construction units to arrange and raise construction funds, so as to develop and design financing models and arrange fund flow channels. The bank will establish a business chain characterized by an interconnected flow, risk controls and significant combined incomes, attracting the participation of private equity investment funds and industrial investment fund through extending syndicated loans and building platforms to achieve versatile financing.
Innovation in the special case of enterprise IPOs of to increase the direct financing scale of small and medium enterprises (SMEs) in a continuous way
Concerning the innovation in financial services to SMEs, IB will stress on pushing forward the “IB Sesame Blooming” SME IPO Program, crossing many financial fields such as direct financing, indirect financing and cash management to provide customized financial service schemes at different stages of their growth and incubate and support SME in terms of IPO. In this year, the Bank will also guarantee the financing demands of 276 SMEs covered by the program of “IB Sesame Blooming” in Fujian Province, help those qualified ones to realize IPO financing, debt financing and equity financing by implementing hierarchical management and providing professional incubation and active services, so as to enlarge the direct financing scale and market shares of outstanding SMEs in the West Straits in a substantial way. Meanwhile, IB will continue to incubate at least 160 SME customers into the IPO program.
Innovation in asset business cooperation to attract funds from all sectors into the campaigns of the West Straits
Targeting large fund sources such as large SOEs, policy banks, insurance capital and social insurance funds, the bank will focus on superior credit assets, reserve projects and large constructions in the “five campaigns” to attract funds from all sectors into projects and outstanding enterprises in the West Straits through innovating cooperation models, providing preferential conditions and utilizing diversified resources. Firstly, to attract the construction funds of large SOEs, IB will, under the promotion of the Head Office, fully utilize its partnership with many SOEs to help injecting funds into projects in Fujian Province . Secondly, to attract credit funds from policy banks. IB will focus on furthering asset business cooperation with the China Development Bank, Agricultural Development Bank of China and Export-Import Bank of China and increase the credit extension for outstanding SMEs by way of joint loans, syndicated loans, and financing guarantees, etc., to achieve an annual cooperation amount exceeding RMB 5 billion. Thirdly, to attract insurance funds and social insurance funds into major projects. By actively seeking business cooperation with insurance companies, IB will utilize the investing insurance funding channels into major projects to secure the support of insurance funds for important infrastructure construction: key railway projects and expressways in Fujian Province. Meanwhile, through cooperating with trust companies, IB will make innovations in trust products and financing products and construct a thoroughfare for investing social insurance funds and insurance funds into the “five campaigns.
Industrial Bank reveals that they have made significant achievements in serving the development of the West Straits since the launching of “Multi-Billion Program for Advancing Six Major Projects” last May. By the end of 2010, the loan balance of the nine branches of IB across Fujian Province reached RMB 132.346 billion, with a loan-deposit ratio reaching 78.43%, 7.23% higher than the average level across the whole bank. Of such loans, those increased to key projects in the province amounted to RMB 6.994 billion and the loan balance at the end of the year was RMB 21.189 billion. The bank also helped key projects and enterprises to finance RMB 1.883 billion by maneuvering innovative financial instruments such as short-term financing bills and medium-term notes in a synthesized way, thus effectively reducing the financing costs. The bank has lent vigorous support to the development of SMEs. By the end of 2010, IB branches in the province had extended credit loans up to RMB 62.989 billion, increasing RMB 17.262 billion and up 37.75% compared with the beginning of the year. The balance of “IB Pass” personal operation loan for private business owners reached 6.063 billion, increasing RMB 4.112 billion and up 210.71% compared with the beginning of the year. The bank has continued its credit support to livelihood projects, such as the transformation of old towns, construction of small towns and construction of urban infrastructure. In 2010, IB extended new credit loans up to RMB 5.02 billion while the balance reached RMB 2.343 billion. According to the arrangement of the provincial CPC committee and government, IB has lent full support to the construction of social insurance cards, releasing the first standard social insurance card. By the end of 2010, it has issued more than 200,000 social insurance cards at a provincial level. The bank has also intensified its extension of loans to start-up business and to the re-employment of laid-off workers, and the special guarantee-based small loans extended to laid-off workers reached RMB 52.96 million, supporting the independent start-up business of 662 laid-off workers. It has granted energy conservation and emissions reduction based loans to 141 projects, reaching RMB 3.775 billion in total. This has lent vigorous support to sustainable development of the economy in the province. To support the construction of Pingtan Composite Pilot Zone, IB established Pingtan Branch last December, the first branch level banking office in the composite pilot zone.