Editor's note: It is proposed in the 18th CPC National Congress to deepen the reform of financial system, improve a modern financial system that can promote the stability of macroeconomy and support the development of real economy; and to complete financial regulation, push forward financial innovation, enhance the industrial competitiveness of such as industries of banking, securities, and insurance, and maintain the financial stability. In order to implement the spirit of the 18 th CPC National Congress, a few days ago, the reporters of the daily went to enterprises, communities and rural areas to explore the beneficial experience and practices of various financial institutions in driving financial innovation and supporting the real economy and improving their own competitive edges. Please see our relevant reports.
Such intangible assets as carbon assets and emission rights can also bring capital for enterprises. In 2011, the first Chinese carbon assets pledged credit business was implemented in Fujian Province – by pledging its expected carbon sale incomes in the future, a private-funded hydropower generation enterprise of the province successfully applied the credit extension of more than RMB 1 million from Industrial Bank (IB).
Meanwhile, against the background that Jiaxing of Zhejiang Province launched the pilot site for the paid use and trade of emission rights, a small-sized dyeing enterprise in the city, by pledging its initial emission right to the pollutants of the chemical oxygen demand each year, received the loan of RMB 1 million from IB, which alleviated its shortage of working capital resulting from its purchase of the emission right.
As the first bank adopting the Equator Principles in China, IB has explored a complete range of advanced credit models in the field of green finance over years. By the end of October of 2012, the green finance projects of IB has saved 23.0554 million tons of standard coal across China each year, reduced 66.1855 million tons of carbon dioxide, 879,400 tons of chemical oxygen demand (COD), 14,500 tons of ammonia nitrogen, 43,600 tons of sulfur dioxide, and 6,900 tons of oxynitride, utilized 14.6629 million tons of solid waste in an integrated manner, and saved 255.7906 million tons of water.
On November 17, 2012, IB became the only winner of “Carbon-value Social Citizen Award” of the Fifth World Economical and Environmental Conference with its outstanding achievements in practicing the sustainable development strategy, performing its social responsibilities in an active way, and promoting green finance vigorously.
“In recent years, IB has, with a variety of financial tools, provided green finance based financing loans of nearly RMB 200 billion to around 1,000 enterprises. At the end of October, the financing balance was over RMB 110 billion, of which the balance of green finance based loans account for 10% of the corporate credit balance”, President Li Renjie of IB said to the reporter.
IB holds the business concept of green finance to “obtain reasonable profits while bringing benefits to the stakeholders”. As proved by the practice, the social responsibility concept has indeed brought great achievements for the enterprise. By the end of September 2012, with its total assets hitting RMB 2.96 trillion, IB has firmly remained among the top 10 Chinese banks and the global top 100 banks. The balance of various deposits hit RMB 1,142 billion, up by 23.32% over the beginning of the year; the balance of various loans amounted to RMB 1,659 billion, up by 16.07%. IB ranked front among similar banks in terms of business growth rate. IB has incorporated the pursuit of harmonious unification of economy, society and environment into its own development objectives on its own initiative. This has not slow down the development of IB, but has brought power for its sustainable development.
By the end of October 2012, IB has examined the applicability of 718 loan projects according to the Equator Principles, with a total amount of project investment up to RMB 988.4 billion. Specifically, 150 of them were approved as projects applicable to the Equator Principles, with a total investment of RMB 206.8 billion involving 147 customers. Forty-three loans have been extended by 21 branches of IB. In addition, the first project supported by the bank in which the enterprise followed the Equator Principles out of its own will was implemented successfully in Xi'an at the end of 2011, with a total investment of RMB 320 million. This signifies that the Equator Principles which have been observed extensively in the world have gained wider recognition in China, and it also indicates the change that Chinese enterprises are seeking to control risks with the Equator Principles rather than by following the principles in a passive way, a sign that the practice of sustainable finance has been further deepened in China.
As indicated by the relevant director of IB, in the future, the bank will adhere to the strategy of green finance strategy, and based on the established competitive edged in green finance, continue innovating in green finance products and services, thus striving to become the “practice forerunner, industrial integrator and rule formulator” of the Chinese green finance.
Industrial Trust: To Become a Leading Supplier of Integrated Trust Services and Investment Management in the Industry
As a trust company in the banking system, Industrial Trust now has a more distinct overall development layout. As said by Si Bin, Vice President of Industrial Trust, the objective of the company is to establish diversified business lines and bring into play the advantages of integrated business operation.
This is also a new development route that Industrial Trust has explored based on the experience and lessons of the former Union Trust Limited.
A gallant turnabout
Formerly known as Union Trust, which was established in 2003, the company had evolved for seven years before the restructuring of IB. Then, Union Trust mainly carried out business innovation in real estate trust, so the business lines were a bit limited.
When IB became the owner of Union Trust in 2009, the company was at the crossing of re-adjusting its development strategies. Meanwhile, the entire trust industry was entering the road to prosperity with the incentive policies backed up by RMB 4 trillion. By the end of 2009, a total of five trust companies have witnessed more than RMB 100 billion assets. Among the 54 trust companies around China, Union Trust ranked behind in terms of asset scale, with only over RMB 10 billion assets under its management.
Industrial Trust could, depending on the strength of the largest shareholder, make adjustment to its strategies quickly and showcase great vitality until its equity restructuring.
In 2011, IB purchased the assigned stock rights of Union Trust held by New Hope Group Co., Ltd. and other companies, thus becoming the absolute controlling shareholder with a proportion of 56.08%. Meanwhile, the bank renamed the company Industrial Trust. With the customer advantages and project resources of IB, Industrial Trust has witnessed its trust business growing in doubles, and in the meantime, it has also seen rocketing corporate profits.
In 2009, the net profits of Industrial Trust only reached RMB 38 million, but the figure was doubled in 2010, hitting RMB 76 million. In 2011, the net profits rocketed to RMB 204 million, 5.4 times as many as the figure in 2009 and 2.7 times as many as the figure in 2010. In the income structure, the handling charges and commissions witnessed the biggest growth. In 2009, the net incomes of handling charges and commissions only reached RMB 55 million, and over RMB 100 million (RMB 105 million) in 2010. But, in 2011, the figure rose by 313% YoY, hitting RMB 434 million. At present, 95% incomes of handling charges and commissions of Industrial Trust come from the trust business, and the company manages nearly RMB 250 billion assets.
Market-oriented direction
Board Chairman Yang Huahui of Industrial Trust did not refrain from talking about the massive competitive edges brought by the largest shareholder. In his opinion, just with the support of IB, Industrial Trust could follow the development of the bank closely. In the future, the company can even “provide trust services wherever IB has an outlet”.
As introduced by Board Chairman Yang, relying on the advantages of the largest shareholder, Industrial Trust has now started its nationwide arrangement, setting up business and customer service network in major economic centers around China, including Fuzhou, Beijing, Shanghai, Guangzhou, Shenzhen, Chongqing, Xi'an, and Wuhan, etc., becoming an equity participant in Zijin Mining Group Finance Co., Ltd. and GF Huafu Securities Co., Ltd., and getting the approval to hold the shares of Chongqing Machinery & Electronics Holding Group Finance Co., Ltd. Now, the company has ten integrated management departments, eight regional trust business headquarters, three direct specialized business departments, and one wealth management headquarters.
As indicated by Vice President Si, the present development path chosen by Industrial Trust is not to repeat the previous “one-leg walking” model. The current Industrial Trust will establish diversified business lines and exert its advantages of integrated trust business operation in the three fields of monetary market, capital market and industrial investment. The strategies are established on the basis of the increasingly diversified assets allocation demands of trust investors at present.
In addition, the market-oriented development strategies are also the present choice of Industrial Trust. As introduced by Vice President Si, Industrial Trust is taking a front position among the trust companies in the banking system in terms of the market-oriented extent. With regard to the question that how Industrial Trust should respond to “extended assets management”, Yang indicates that the company will take it as a strategic choice in the current stage to seek the all-sided cooperation between financial institutions such as banks, brokerages, insurance companies, fund companies and trust companies, so as to achieve mutual complementation of resources, regulate business development, extend the service chains, and meet market demands.
Putting the Integrated Financial Platform on the Agenda, Industrial Trust Positioned itself as a “Trust Supplier”
After the industries of securities, insurance and fund released new policies regarding assets management to extend the investment scope, the concept of “extended assets management” has gradually been recognized in the sector. In the words of Yang Huahui, Board Chairman of Industrial Trust, what follows next will be an age where all trust companies compete for assets management.
At the Industrial Trust·2012 Assets Management Summit, Yang proposed that all financial institutions including investors would suffer losses if the market competition was not ordered and sustainable. Just based on such understanding, Industrial Trust has set its positioning in the field of assets management, namely to provide support for various financial institutions to participate in the assets management market in an all-sided manner and become a partner for the sustainable development of assets management business.
Innovation, the propeller of advantaged growth
In the recent five years, the investable assets possessed by individuals in China have kept increasing at the rate of 18%. In the existing assets management products, the scale of wealth management products of banks reach about RMB 8.09 trillion, that of insurance assets RMB 6.90 trillion, that of trust assets RMB 6.32 trillion, that of fund assets RMB 2.43 trillion, and that of securities assets nearly RMB 1 trillion.
Based on the development experience of the international assets management market, the diversified and integrated demands of customers will increase rapidly upon the rocketing growth of wealth. The Chinese assets management market has encountered corresponding problems, such as insufficient products, services of low quality and level, and the lack of sustainable product supply lines.
In this regard, Si Bin, Vice President of Industrial Trust, believes that, from the perspective of industrial chain of assets management, it is very hard for an institution to provide all products and distribution and consultation services, and even under the integrated operation of a financial holding company, it should allocate different functions to the corporate agencies or business departments in independent operation. This is determined by the law of market work division.
“The core advantages of the financial institutions in China lie in three aspects: franchised business right (namely license), resources of shareholders, and innovation capability. While the threshold of monopoly disappears gradually, the real driving force for growth must turn to innovation”, said Vice President Si.
Board Chairman Yang said: “In fact, different financial institutions have different innovation gifts and the core capabilities of different institutions correspond to different links of product, channel and consultation in the entire industrial chain. With 10 years' development, the demands of customers become increasingly diversified, one-stop and specialized, and the solution to such contradictions is to build up integrated wealth management capabilities through combining various advantages”.
Industrial Trust, to become an integrated supplier
Now, the models of bank-trust cooperation and bank-securities cooperation have reached a considerable scale in China, and similar to the development of assets management market abroad, the trend of integration via strategic cooperation or equity restructuring has appeared at home.
It is reported that Industrial Trust has established a new development path after completing the restructuring of the former Union Trust, that is, specific positioning, market competition, encouragement for innovation, and intensifying integration. Up to now, the trust assets under the management of Industrial Trust have reached about RMB 270 billion, and the company has developed over 1,600 trust projects accumulatively, with product lines covering the monetary market, capital market and industrial investment.
As indicated by Yang, at present, Industrial Trust has established ten integrated management departments, trust business headquarters in eight regions, three direct specialized business departments, and one wealth management headquarters. In the future, it also plans to establish integrated financial sub-platforms including PE subsidiary, fund company, futures company and auto finance company.
“As a professional trust company in the banking system, we attach great importance to the business cooperation with banks, insurance companies, securities companies and fund companies. Now, we have established business cooperation relations with over 30 commercial banks around China, and fully launched the cooperation with such institutions engaging securities, fund, insurance and third party business. We hope establish all-sized business cooperation with 100 commercial banks, 20 securities companies, 20 fund companies, 10 insurance companies, 20 Suntime private placement companies and 5 third party wealth management institutions within about two years. We hope that we can develop the services to various financial institutions into the distinctive business of Industrial Trust and provide support for various financial institutions to participate in the assets management market in an all-sized manner”, said Yang.