Date: January 15, 2013 Source: Modern Bankers
When Fujian Province saw the historical opportunity to develop the Western Taiwan Straits, the mission and opportunities of the financial industry also lied ahead of local financial institutions. As the largest financial institution in the province, Industrial Bank (IB) showcased its own distinctive features at the strategic level by lending vigorous supports.
Integrating resources: lending full support to the key development strategies of the Western Taiwan Straits
“IB has actively implemented the key development strategies of the Western Taiwan Straits.” Meng Jun, Vice General Manager of the Management Department of Corporate Finance of IB, introduced that IB had actively implemented the strategy of the Western Taiwan Straits of the Chinese Central Government and the strategy of “Driving the scientific and frog-leap development of Fujian” of Fujian Provincial CPC Committee and Fujian Provincial Government, further elevated its services to Western Taiwan Straits to the strategic level of the whole bank to make special deployment and launched important measures successively for years, exerting itself to serve the construction of the Western Taiwan Straits Area by diverting its resources. The bank launched the “Multi-Billion Program for Advancing Six Major Projects” in 2010; it carried out “Seven Innovations” to support “Five Campaigns” in 2011. In 2012, it brought into full play its two advantages – location of group headquarters and integrated business, and exerted itself to activate the “ three-wheel drive ” – regional planning, key industries and projects, and real economy and SMEs, so as to enter into the crucial links and key fields for the economic growth of the Western Taiwan Straits in an efficient way, help boost the development of the whole province and the construction of the Western Taiwan Straits in a sustained way.
“To serve the Western Taiwan Straits, we should exert our bank's advantageous features,” Meng said. “While IB accelerated the integrated business operation in recent years, our support to the Western Taiwan Straits was also transformed into the integrated services characterized by “one body with two wings” from the previous simple conventional credit support.” For instance, the two subsidiaries of IB, China Industrial International Trust Limited and Industrial Bank Financial Leasing Co., Ltd. are both important measures of the bank in providing services to the Western Taiwan Straits. In addition, the business advantages of IB's investment banking also played a significant role. The investment banking of IB ranked No. 1 among all joint-stock commercial banks, and accounting for nearly 1/5 in terms of direct financing in the market of Western Taiwan Straits.
With regard to the layout of new outlets, IB has its own outlets and service platforms across China. Based on branches throughout the country, the bank intensified in-depth cooperation with Fujian businessmen. For instance, IB Shanghai Branch registered a total of RMB 20 billion in cooperation with Fujian businessmen and chambers of commerce established by them, such as Fujian Chamber of Commerce and Quanzhou Chamber of Commerce.
Multi-dimensions: assuming important tasks in the regional economic development
As a leading force in providing financial services to the Western Taiwan Straits, IB actively provided services to key enterprises and industries in the real economy of the Western Taiwan Straits, and intensified its supporting efforts to serve the real economy. Meng told the reporter that IB has kept increasing credit support, made active innovation in products, and provided vigorous financial guarantee for the construction and development of the Western Taiwan Straits by allocating credit resources in a scientific manner and mobilizing a variety of financial tools.
Meng introduced: “the economic development of the Western Taiwan Straits has been divided into many regional sectors, and IB has followed each ‘sector' closely. In this year, the bank signed strategic cooperation framework agreements with many governments at the county/municipality level including Fuzhou Municipal Government, registering a total of RMB 80 billion, to give priority to supporting the local fundamental industries, hi-tech industries and major construction projects.”
With regard to the support to key industries and enterprises, Meng listed out the measures of IB to the reporter in focusing on boosting the economic growth of the Western Taiwan Straits:
First, IB has actively applied innovative products and lent vigorous support to the construction of expressways. In the recent 2-3 years, there were only a limited number of bridges under preparation and traffic flow in expressways that put into operation. As a result, financial institutions restrained loans to the business. However, from January to September this year, IB approved the loans for eight expressway projects across Fujian Province, extending credits about RMB 6.3 billion, of which a total of RMB 3 billion have been received by the corresponding borrowers. As the financial consultant of Fujian Provincial Expressway Company Ltd., IB underwrote the medium-term notes of the company totaling RMB 2 billion.
Second, the bank supported the construction of Pingtan Composite Pilot Zone. IB took the lead to sign an overall strategic cooperation agreement with Pingtan among all joint-stock commercial banks, and in this year, it further implemented the cooperation agreement with the city, providing credit support of not less than RMB 10 billion. IB released measures to further five financial services with a view to lending full support for the development and construction of Pingtan Pilot Zone. In July, the bank proposed such specific measures as increasing the special loans by RMB 3 billion and accelerating the implementation of debt financing tool.
Third, the bank increased resource input to support the development of key enterprises. It provided a total of RMB 25 billion of credits to the state-owned enterprise groups at the provincial level including Fujian Investment & Development Group, Fujian Energy Group, and Fujian Provincial Communication Transportation Group, etc., and met the financing and wealth management demands of these groups and their subsidiaries by utilizing such products as credit, structure financing and standardized investment in an active way.
By the end of September, the balance of loans extended by IB in supporting the Western Taiwan Straits has hit RMB 261 billion, with an increase of RMB 37.7 billion over the beginning of this year, up by 21.25%, far outperforming the average loan growth of financial institutions in the province, 13.96%, and the growth of financial loans across China, 12.49%.
Service focus sinking: providing financial support for small- and mini-sized enterprises
Centering on the characteristics of demands of small- and mini-sized enterprises, the bank targeted at their financing difficulties, enriching the business product line for small- and mini-sized enterprises and improving the specialized financial services to small- and mini-sized enterprises to boost their healthy development.
Yan Youliang, Assistant General Manager of the Small-sized Enterprises Department of IB introduced to the reporter the “IB Open Sesame” program, a characteristic product of the bank, and innovation in the special case of IPO program for enterprises. Targeting at small- and medium-sized enterprises with the intention of going public, IB divides them into three stages, namely initialization, growth and maturity, and provides corresponding services according to the current conditions. During the period of initialization, IB will provide capital navigation service, namely, based on the financial situation of an enterprise, normalize the business and finance under laws in accordance with standards for a listed company and carry out standardized operation in the three phases: discovery of value, exploration of value and improvement of value. During the period of growth, IB has cooperation platforms established together with VCs and PEs across China, helping customers to contact with VCs and PEs. From the period of maturity to IPO, IB will invite brokerages to join. Up to now, there have 786 super customers meeting the Open Sesame Small-sized Enterprises IPO Program, with 16 launching IPO successfully either at home or abroad, 19 being in the IPO procedure, 32 successfully introducing private placement or venture capital institutions, and four successfully completing registration and issuing bonds.
Now, all branches of IB have the small-sized enterprises department and separate customer services. In terms of examination and approval, all branches are required to establish their own credit extension resources and detailed rules considering their regional features and industrial distribution. For the operation procedure regarding credits to small-sized enterprises, IB has put forward the principle of “short process and stress on substantial effect”, namely, the procedure should be short. It has been transformed into the current “three-in-one” procedure from the former one where the customer manager first carries out examination and then the examiners do review. That is to say, the risk manager, customer manager and business assistant carry out risk control together at the spot. To minimize the worries of customer managers in doing business with small- and mini-sized enterprises, IB carries out the system of exemption of liabilities based on due diligence, where one will be exempted from liabilities as long as he or she does due diligence. In addition, the bank has also established an effective incentive mechanism, assessing relevant performances separately.
Wealth management: providing all-course services for the capital flow of customers
Mentioning the business of assets and wealth management, IB provided a group of data to the reporter. Now, the bank has more than 1,500 customers with regard to the business of wealth management and more than 360 customers in terms of capital management in the area of Western Taiwan Straits.
The Cash Management Department of IB told the reporter: the bank's cash management products are those of settlement with the function of embedded upgrading based on the whole course of capital flow of customers, covering the assignment and transfer for distribution, circulation and utilization, with a view to improving the efficiency of capital flow, ensuring the security of capital and sufficient disclosure of information, and carrying out wealth management over the capital pooled from customers in accordance with the requirements for time and frequency. IB divides customers into three groups: group-based customer group, cluster-based customer group and trading market based customer group.
A group-based customer group means the compulsive subjection relation between the superior and the subordinate, which is very stable, and a group relation refers to the relation between a parent company and a subsidiary. For group-based business, the major product promoted by IB is capital pool, where such services as cash aggregation, value maintenance and value incremental can be realized. Recently, the bank released bill pool, a product initiated by IB, which can not only enhance the cash liquidity of a group customer, but also standardize the financial procedure of the whole group. Clustered enterprises are not of joint-venture relation, nor administrative subjection, but they have very stable business exchanges, for instance enterprises downstream and upstream on a supply chain. Additionally, there is the business based on trading market. With trading platforms coming into existence based on a large amount of transactions, IB combines both the suppliers and demanders with products. For instance, at the coal trading platform in the province, IB corresponds to both the suppliers and demanders with products, improving the efficiency of capital flow of both parties.
Financial innovation: providing all-sided services for the financing of customers
Against the market environment with tightening monetary policies, IB provided financing services to enterprises in the Western Taiwan Straits by making innovation in financial products. Meng told the reporter: “First, boosting financial services for the construction of the Western Taiwan Straits in collaboration with other large financial institutions.” For instance, the bank carried out close cooperation with policy banks like China Development Bank (CDB). Since the cooperation was established in 2010, the two parties have registered a cooperation value over RMB 10 billion. In this March, in order to enrich the financial services to the Western Taiwan Straits, the two parties joined hands with each other again, signing the Financial Cooperation Agreement on Jointly Pushing Forward the Economic Construction of the Western Taiwan Straits, and extending their cooperation to 12 fields including bond market, capital market, people's livelihood, green finance, and trading finance. The two parties' cooperation to serve the construction of the Western Taiwan Straits has won the recognition of the government and regulatory authorities.
Second, building service platform to lend all-round support for the construction of the Western Taiwan Straits. Meng gave four examples. Firstly, the bank and China Railway Construction Corporation (CRCC) held the ceremony to sign the strategic cooperation agreement in this year, with which IB will provide special financial support matching the key projects of CRCC in Fujian and efficient and superior financial services to the company. Secondly, in this September, the bank signed the strategic cooperation agreement with Fujian Local Taxation Bureau, building a tax-attracting service platform. The cooperation between the two parties pushed forward the construction of local economic tax sources, further tax-bank cooperation, improved financial services and tax services in an all-round manner, intensified the management of financial risks and tax risks, and helped enterprises to improve their management and operation. IB became the first financial institution establishing tax-bank cooperation with the taxation system in the Western Taiwan Straits. Thirdly, the bank built bank-enterprise linked innovative financial service platform together with the Fujian Provincial Women's Federation and Fujian Provincial Woman Enterprisers Association, and jointly held the ceremony for signing agreement on the “Start-up of Fujian Woman Enterprisers and Red Peony Action”, focusing on supporting woman enterprisers to launch new businesses and assisting the woman enterprisers in the Western Taiwan Straits to “go out”. Fourthly, the bank took part in the Cross-Straits Technology & Projects Fair. In this year, IB participated in the fair in collaboration with Industrial Trust and IB Financial Leasing for the first time, showcasing the financial achievements in the construction of the Western Taiwan Straits in an all-sided manner and receiving good comments from all sides.
In terms of trust financing, the financing loan provided by Industrial Trust in Fujian Province has hit a total of RMB 17.3 billion by the end of this third quarter.
In the area of financing lease, IB has established a financial leasing company to meet the financing demands of enterprises for construction projects with financial leasing products. The company has extended a total of RMB 1.38 billion across Fujian Province, mainly serving Fujian Provincial Expressway Group, Fujian Provincial Communication Transportation Group and Fujian Haixia Environmental Protection Co., Ltd.
In mentioning green credit, Meng said that, as the forerunner and advocator of green finance and the first “Equator bank” in China, IB had gone without saying to take the lead in developing the green finance market and boosting environmental protection, energy conservation and emission reduction with innovation in green finance, making contribution for the energy conservation and emission reduction cause of Fujian Province. IB has accumulatively extended over RMB 100 billion energy conservation and emission reduction based financing loans to over 1,000 enterprises with a variety of financial tools, covering a range of modern environmental protection projects such as new energy, renewable energy, green rice, energy-saving products and sewage treatment. All the emission reduced in the projects supported is equivalent to shutting off 148 thermal power plants of 100 MW a year. A total of 840,000 tons of wastes was recycled. If they were transported by trucks for disposal, these trucks connected with each other head to tail might extend from Shanghai to Beijing.