“The result of examination and approval can be known within three workdays and a loan of up to RMB 10 billion may be granted!” Upon mentioning the “East & Fast Loan”, a type of loans to small-sized enterprises with the shortest examination and approval time limit released by Industrial Bank (IB) recently, Mr. Lin, the boss of a shoemaking factory in Jinjiang, Fujian, exclaimed again and again, “the loan can be applied by providing assets including personal residential house, industrial workshops or commercial premises, and it is almost customized for small-sized enterprises like us.”
In fact, the product of “East & Fast Loan” is only a small part of the whole story that IB boosts the upgrading of financial services to small- and mini-sized enterprises and serves the real economy in an all-round manner.
As discovered by the reporter during investigation, in recent years, IB, corresponding to the demands of the real economy for diversified and differentiated financial services, explored and practiced the transformation in business development models and profiting models and “supplied blood” to the real economy via a variety of channels by sinking the gravity center of financial services to small-sized enterprises, creating “shadow CFO” of enterprises and promoting inclusive financial businesses such as green finance and bank-bank platform.
Boosting the development of small-sized enterprises nearby
Although being positioned as a lead bank of medium-sized enterprises, IB, which has always maintained a low profile, has long made sustained efforts in the field of small- and mini-sized enterprises.
“With the scale of our enterprise expanding at a fast rate, our profits doubled within two years.” Looking back to the evolution of a hi-tech enterprise engaging in outdoor bamboo recombinant in Fujian, where he is the principal, Mr. Lin couldn't help exclaiming, “Upon the critical moment, ‘IB Open Sesame' SME IPO Program gave us a boost!”
‘IB Open Sesame' SME IPO Program, mentioned by Mr. Lin, is an integrated financial service program released by IB targeting at enterprises at the different growth stages of SMEs, namely initialization, growth and maturity, offering not only such enterprises with loan-based financial support, but also professional assistance for their various business demands including equity financing, IPO planning, debt financing and marketing planning, etc. The story goes as follows. After the product developed by the enterprise where Mr. Lin works passed the European Environmental Evaluation and Certification, it planned to carry out batch production, Nonetheless, it fell into a financing predicament as it didn't have any incomes from its development in the early period and it only held a limited amount of assets. IB worked out a customized financial service solution for the enterprise. The first step was to introduce equity investment. After the successful contact with a listed company which became a shareholder of the enterprise by making the capital contribution of RMB 15 million, it expanded its production capacity. Then, in the second step, it received the equity investment of RMB 30 million by introducing a PE fund to boost its accelerated development.
As disclosed by Wang Yi, General Manager of the Small-sized Enterprises Department of IB, by the end of this July nearly a total of 4,000 outstanding SMEs have been covered into the program of “IB Open Sesame”, of which nearly 100 have launched their IPOs successfully, over 130 have passed the examination of CSRC or wait for the examination in the IPO guidance stage, and more than 150 have successfully introduce private equity.
In addition, IB adjusted the customer orientation of its corporate banking in an active manner; the reporter also learnt, at the beginning of this year, IB gave priority to providing financial services to small- and mini-sized corporate customers with assets totaling not more than RMB 60 million, to give all-out boost to small- and mini-sized enterprises.
Along the strategic adjustment of customer orientation, IB has vigorously carried out the reform of specialized operation system for small-sized enterprises and established a “three-grade” specialized operation system for services to small-sized enterprises, consisting of the Small-sized Enterprise Department of IB Head Office, small-sized enterprise departments of branches, and small-sized enterprise centers at cities to reinforce the organizational impetus. In the meantime, the Bank has energetically innovated in financial services and products for small-sized enterprises and kept enriching the business product line for small-sized enterprises to meet their diversified financing needs.
Now, IB establishes a small-sized enterprises oriented product and service system with relatively complete business categories, covering the two sectors of traditional banking financing model and innovative value-added service model, which consists of IB Open Sesame, IB Guarantee-assistant Loan, IB Point-based Loan, IB Enhancement Loan, IB Fast & Quick Loan, equipment mortgage loan for small-sized enterprises, self-constructed building factory mortgage loan, and joint loan and joint guarantee, and becomes a powerful backbone for the growth of small-sized enterprise business at a rocketing speed.
By the end of this June, the balance of loans extended by IB to small-sized enterprises hit RMB 66.709 billion, an increase of 33.50% over the beginning of this year, with the number of small-sized corporate customers reaching a total of 201,700.
“Blood supply” in the way of “shadow CFO”
Banks adopt different methods to serve the real economy, and the eye-catching method adopted by IB is the “blood supply” in the way of “shadow CFO”.
Qiu Guanhua, a banking analyst of Guotai Junan Securities, believes that IB strategically positions itself as the “shadow CFO” of customers, namely, in the perspective of serving as a CFO for customers, the Bank, holding the thinking of investment banking oriented service, provides one-stop packaged financial solutions for customers by utilizing multiple financial licenses in an all-round way.
In fact, IB, the “shadow CFO” of enterprises, provides diversified financing for customers with the business layout under the pattern of “one body with two wings” and thus injects funds into real economy enterprises in different forms. As the name suggests, “one body” refers to the conventional credit businesses; “two wings” first refer to the non-credit businesses including investment banking, financial lease and structure financing; second, the payment and settlement businesses covering supply chain and cash management.
The case that IB provides services to Foshan Public Utilities Holding Co., Ltd. (referred to as “FPU” below) serves as a good interpretation for the model of “shadow CFO” of enterprises.
Mainly engaging in investment, construction and operation of public utilities, and investment in and management of other projects including hi-tech and infrastructure, FPU has many subsidiaries engaging in electric power, water affairs, and gas, etc. Belonging to a capital-intensive industry, the company had launched and constructed many projects. Considering the actual needs of FPU, in the field of conventional credit, IB provided it with the services including working capital loan, bank's acceptance bill, letter of guarantee, project loan, and commercial property loan to meet its needs of day-to-day operation funds and project construction funds. In the non-credit field, IB extended the financing channels of the company and reduced its financing cost with the businesses including investment banking, financial lease and trust so that the influence of banking credit policies to its financing was reduced and its asset-liability structure became better matched. In this way, IB fully settled the financing needs of the company. Take the business of investment banking as an example. IB has accumulatively underwrote and issued for the company non-public directional financing tools totaling RMB 1 billion, and planned to further underwrite and issue medium-term notes worth RMB 900 million, thus effectively meeting its financial demands for project construction. In the field of payment and settlement, IB provided Foshan City District Electricity Fuel Supply Company, a subsidiary of FPU, with the supply chain financing service where the company is taken as the core enterprise, to settle the gap between the time that it pays funds for purchasing coal and that it collects the electricity sale fees and improve its capital utilization efficiency. Additionally, IB also provided cash management business for FPU, established capital pool implementation plan, and rebuilt the group service platform by way of bank-enterprise direct linkage, improving the cash management level of the company effectively.
In the case of FPU, IB, from the perspective of a “shadow CFO” of the enterprise, adopted the tactic of “taking the conventional credit as the base, breaking through with investment banking, following up with trade financing, and consolidating with cash”, effectively meeting its multi-layered and financing demands in multiple dimensions.
As revealed in the investigation, the “shadow CFO” service of IB opens the following “blood-supplying” channels to the real economy: first, to provide enterprises with integrated financial services including cash management, bond underwriting, financial consultant, and merger and restructuring; second, to provide enterprises with trade financing products, structured financing products, green financial products and emerging diversified financing products; third, to promote for enterprises intermediate business products featuring “low resource consumption and high composite incomes”, in the areas of trade financing, payment and settlement, and investment banking.
Under the strategic positioning of “shadow CFO”, IB has significantly improved its integrated financial service capacity to the real economy in a sustained manner. By the end of June 2013, the balance of corporate deposits of the Bank hit RMB 1750.197 billion, up 15.82% over the beginning of this year; the balance of corporate loans (excluding discount) reached RMB 992.170 billion, an increase of 8.77%; and the number of corporate financial customers totaled 314,500, growing 9.21%.
“Inclusive finance” lending vigorous support to the real economy
Besides “shadow CFO”, the reporter discovered, IB has also endeavored to support the transformation and upgrading of the real economy by carrying out the business of “inclusive finance”.
We cannot circumvent the issues of “Agriculture, Rural Area and Farmers” in economic transformation and upgrading. Following the requirements of the national policies to push the development of rural and urban areas in a planned manner, IB kept intensifying its credit funds support to old-town reconstruction of pilot small towns, construction of new towns as well as the supporting infrastructure and public services, and lent vigorous support to the reconstruction and construction of government-subsidized houses and dilapidated houses in rural area, thus offering a boost to the public welfare undertaking. By the end of June 2013, the agriculture-related loans extended by IB hit RMB 170.636 billion, covering the following industries: production and wholesale of fruit and vegetable, mariculture, drink processing, food processing, wholesale of livestock, production and processing of meat products, and bamboo, vine, palm and grass products, etc.
Meanwhile, with the building of “bank-bank platform” for years, IB has transmitted advanced management experience, financial products and technological capability to the small- and medium-sized financial institutions in urban and rural areas including small- and medium-sized urban commercial banks, rural commercial banks, rural credit cooperatives and rural banks. By the end of June 2013, with more than 23,000 interconnected outlets, the “bank-bank platform” of IB served about 60% urban commercial banks and 1/3 rural financial institutions across China, covering both rural and urban areas and serving “Agriculture, Rural Area and Farmers” effectively. In this way, the platform has improved the services of financial institutions in the cities of the third and fourth tiers and rural areas to the “Agriculture, Rural Area and Farmers” and small- and mini-sized customers at the terminal indirectly.
In addition, IB has even spared no effort in the area of green finance which is one of the grabs for the banking industry to serve the real economy.
After trying the energy efficiency project financing in 2006 and becoming the first “Equator Bank” in China in 2008, IB has kept making in-depth exploration in green finance, leading the development tide of green finance. With its green finance covering three major fields: low-carbon economy, recycling economy and ecological economy, and involving a variety of projects such as improvement of energy efficiency, development and utilization of new energy and renewable energy, carbon emission reduction, sewage treatment and water area control, reduction of sulfur dioxide emission, and recycling of solid wastes, IB has become the bank with the broadest green finance product family and the most diversified products.
As the saying goes, “many a little makes a mickle”. IB has benefits more enterprise groups with its financing behavior and institutional arrangement in green finance. In particular, considering that small- and mini-sized enterprises, which are characterized by small scale and light assets, are in lack of enough guarantees and pledges, and cannot receive the support of conventional credit financing easily, IB has, by making use of a variety of innovated financial tools, effectively reduced the threshold for energy conservation and emission reduction financing of enterprises so that those SMEs and small- and mini-sized enterprises that lack guarantee and pledge resources could receive financial support.
By the end of this June, IB has accumulatively granted nearly RMB 286.2 billion of green finance based financing loans to over 1,000 enterprises. The projects supported with such loans could save 23.2948 million tons of coal equivalent across China each year, reduce 67.157 million tons of CO2, and save 255.7906 million tons of water, and it is equivalent to shutting off 154 thermal power plants of 100 MW or stopping running the 100,000 taxis for 32 years.