As the first "Equator Bank” in China, Industrial Bank (IB) has now become a joint-stock commercial bank with a full range of “green finance” services around the whole country. When going to the province for interview, the reporter discovered that IB, which had come into Guangxi at an earlier time, had formed a development concept meeting the positioning of “Ecological Guangxi” after developing a certain period.
Green positioning of “Equator bank”
President Li Renjie of IB indicated that, as the first Chinese bank joining the “Equator Principles", the bank promised never to grant loans to any project that might lead to environmental pollution.
The Equator Principles are a set of voluntary guidelines established by International Finance Corporation (IFC) in reference to the IFC Performance Standards for managing the social and environmental problems related to project financing for development, so as to ensure that commercial banks may take into full consideration the social and environmental problems in the business of project financing.
As early as 2006, IB and International Finance Corporation (IFC) entered into an agreement to jointly release the innovative energy-efficient financing project in China, in order to provide credit support for the projects of Chinese enterprises to improve their energy efficiency and develop and use clean energy and renewable energy. In 2008, the bank officially announced to the public to adopt the Equator Principles, becoming the first Chinese “Equator bank”. It set up the Sustainable Finance Center, an institution specialized in sustainable finance in 2009, and upgraded the center into a Class I department of the Head Office in 2012.
The reporter learnt in the interview that energy conservation, emission reduction, and environmental protection had become the core concept across the entire bank. After years' exploration, IB has become a bank with obviously differentiated competitive advantages in credit resources in the environmental protection at home.
Advantage 1: A joint-stock bank with the capacity to provide unified and linked services across the bank and assessment rules from top down. Through performance assessment, the bank guide teams at branches and sub-branches to push forward the implementation of financing business in the field of energy conservation, emission reduction and environmental protection.
Advantage 2: The bank has well-established, integrated solutions. As energy conservation, emission reduction, and green and environmental protection have broad coverage, customers are of complicated sources, and even over 80% of them are developed in the process of providing conventional credit services. This means that the bank must be able to provide a package of solutions. Only providing customers with individualized and integrated financing solutions by combining credit financing with debt financing tools, structure financing and leasing, the bank may turn "green“ from a concept into practice.
Advantage 3: The bank has the sustained capability to make innovation in environment-friendly credit. In recent years, IB has organized business development and management teams in relevant fields including technology, finance and law, etc. The bank has released the special financing business with carbon as the pledge and the financing business with future usufruct under energy performance contracting as the pledge, always ranking front in terms of innovation in the industry.
The report of “Green Credit Performance Ranking of Listed Chinese-funded Banks (2008-2011)”, which was jointly participated by non-governmental organizations in China, was released in September 2012. The report gave a comprehensive assessment to the green credit performance of Chinese-funded listed banks in the recent four years. IB topped the overall ranking in the report.
Releasing characteristic “green finance” products
President Shen Weiqun of IB Nanning Branch said: “We are having an increasingly deep understanding to the Equator Principles. In pursuing benefits, a bank should obtain reasonable profits while bringing benefits to the stakeholders, and plan its business development in the long run by shouldering certain social responsibilities.”
In recent years, in Guangxi – a region with great pressure of energy conservation and emission reduction, IB Nanning Branch, depending on “green finance” characteristic, released a range of characteristic products with high pertinency including clean development mechanism (CDM).
The reporter learnt from the Department of Environmental Protection of Guangxi Zhuang Autonomous Region that the energy conservation and emission reduction of Guangxi during the “12 th Five-Year Planning” period did not merely lie in figures, but more the special time and geographical situation. In recent years, the region was attacked by prolonged drought in summer, and due to the insufficient supply of hydropower, the electricity generated by thermal power rocketed. The reverted ratio of hydropower and thermal power resulted in the rise of energy consumption. Under the background of industrial upgrading along the coast, Guangxi became the preferred region for the transfer of industries from coastal areas like Guangdong. Business and investment attraction faced the trial of screening and controlling out-of-date production capacity strictly. The sewage treatment plants in quite a number of cities and towns in Guangxi did not have well-established supporting pipe networks. As a result, sewage was collected at a low rate, and the influent concentration was low. Hence, it was hard to exert the emission reduction benefits.
Considering this situation, IB cooperated with two famous enterprises in power industry of the region who were under great pressure in energy conservation and emission reduction and accomplished the CDM-based carbon sale business of hydropower and risky projects, significantly reducing their pressure in energy conservation and emission reduction.
In August 2012, IB released the financing business with future usufruct under energy performance contracting as the pledge to provide financing support for the energy conservation and emission reduction of key industrial enterprise and public utility institutions via energy-saving companies. By the end of October 2012, the branch provided more than RMB 3 billion financing loans in the field of green finance, winning favorable comments in the industry.
New breakthrough in the age of “Beautiful China”
In the report of the 18 th CPC National Congress, “Beautiful China” became a new term attracting the attention of all sectors. IB also plans to release a range of more vigorous "green finance” measures, define its own positioning in the new age and boost the construction of a “Beautiful China”.
As discovered by the reporter during the interview, IB has launched a number of brand-new measures. For instance, it adhered to specialized management and sustained innovation for reducing the financing cost of enterprises, provided differentiated products in the peer competition, and improved the risk control in these ways to ensure the quality of its assets.
Take the industry of reclaimed non-ferrous metals as an example. As introduced by Shang Fushan, Vice Chairman of China Non-Ferrous Metals Industry Association (CNIA) and Chairman of CNIA Reclaimed Metals Branch, in recent years, the annual output of major reclaimed non-ferrous metals, such as reclaimed cooper, reclaimed aluminum and reclaimed lead, kept increasing at the rate of 27% on average each year. China has become a big power of reclaimed non-ferrous metals in the world, but the development of the industry still needs sustained capital support. Because the raw materials of the industry are imported from abroad, it is pressing to settle the capital bottleneck by way of order pledge and overseas redemption.
Considering this situation, IB actively engaged in the Non-Ferrous Metals Industry Park of Wuzhou and provided services to the manufacturers of reclaimed copper with the pledge of overseas orders. The bank became the first one to try tomato in the field. It provided over RMB 600 pledge loans only to the reclaimed copper projects across the city.
Lin Rende, Vice President of IB Nanning Branch said: “The bank is exploring more innovative methods. By carrying out quantitative analysis over the properties of the green finance business concerning energy conservation and emission reduction on its own, IB adopts the financing model without external guarantee in the financing services to SMEs to the largest extent, so as to reduce the financing cost of such enterprises.”
Industrial Bank (IB) Shanghai Branch has long paid high attention to the financial services to small- and mini-sized enterprises. With sustained innovative measures and products, the branch has actively explored the ways to develop financial services to small- and mini-sized enterprises, intensifying the financial support to such enterprises across Shanghai. It has established independent pre-loan, in-loan and post-loan functional departments for small- and mini-sized enterprises, implemented credit policies and reviewing mechanisms different from those for large- and medium-sized enterprises, and built such cluster-based marketing platforms as government, commerce chamber, and industrial park, thus realizing the development of small- and mini-sized business customers in batches.
With a range of institutional arrangement, the branch implemented the requirements of relevant documents of the government and regulatory authorities in an effective manner, and gradually built up its distinctive business features and efficient professional capabilities in the financial services to small- and mini-sized enterprises. In the first nine months of this year, the increased loans of the branch to small- and mini-sized enterprises were far higher than those in the last year, 32% higher than the increase of all loans. The increase of loans to small-sized businesses with a single credit amount not more than RMB 5 million is 63% higher than the increase of all loans. The three “not-less-than” objectives were all fulfilled.
Well-established organizations providing more considerate services
The branch has established a financial service team for small- and mini-sized businesses with nearly 400 members at all outlets around the city to contact with small- and mini-sized business customers nearby, so as to provide convenient financial services to small- and mini-sized enterprises.
In the meantime, the branch has also set up sub-branches targeting at small- and mini-sized enterprises including Qingpu Sub-branch, Songjiang Sub-branch, Fengxian Sub-branch, Jiading Sub-branch, Baoshan Sub-branch, and Minhang Sub-branch. Grasping the opportunity of the campaign of “transformation and development driven by innovation” across Shanghai, it also made great efforts to develop technology finance. In this year, it has established two technology-oriented sub-branches: Zhangjiang Sub-branch and Yangpu Sub-branch, focusing on innovative technology enterprises and specializing in providing financial services to technology-oriented SMEs.
Simplified approval process enabling faster services
In 2012, IB Shanghai Branch further implemented the time limit based working system through making innovation in internal flow and linking in a whole, so as to improve the handling efficiency. In this way, the branch aims to meet the capital demands of small- and mini-sized enterprises to the largest extent. Centering on the financing demand features of supply chains, technology parks and industry clusters, the branch actively explored new financing methods such as investment-based joint loan and performance guarantee insurance based loan, carried out business cooperation with outstanding guarantee institutions to establish a streamlined operation system for loans to and guarantees for small- and mini-sized enterprises, so as to break through the financing bottles of SMEs with “light assets” in an effective way.
The branch has also adopted the green channel process for the approval of small- and mini-sized enterprises. Under a normal circumstance, the credit approval for a small- and mini-sized enterprise may be accomplished within three business days. Take the product of “Quick Loan to Small- and Mini-sized Enterprises” as an example: The branch finishes the pre-loan investigation within a business day after receiving the business application; gives a reply regarding the credit line, term and interest rate within a business day after collecting all materials required; and grant the loans within a business day after the enterprise goes through the formalities for pledge registration, insurance and extension approval. Such “one-business-day” system obviously improves the efficiency.
Furthering financial reform to provide more extensive services
In 2012, against the background of credit scale in great shortage, IB Shanghai Branch actively asked the Head Office for the special loan scale to small-sized enterprises, and gave priority to ensuring the business extension demands of small- and mini-sized enterprises across the city.
It is reported that the branch carries out independent assessment over the line for small- and mini-sized enterprises. In combination with the strategic orientation of developing small- and mini-sized enterprises oriented businesses vigorously, it has launched a number of marketing competitions, giving awards to customer managers with outstanding performance. Meanwhile, it implemented the differentiation policies like converting the number of customers into deposits as a trial, so as to enhance the enthusiasm of customer managers in developing businesses for small- and mini-sized enterprises.
IB Shanghai Branch will keep improving the system of financial services to small-sized enterprises, bettering the financial services to small-sized enterprises in an all-sided manner, and further implementing the “Four Separates” principle of the financial services for small-sized enterprises (namely separate credit program, separate allocation of human resources and financial resources, separate client identification and credit review and separate accounting) according to the ”Six Mechanisms” for granting credits to small-sized enterprises, so as to keep improving the capability to providing services to small- and mini-sized enterprises.