On May 30, 2014, Industrial Bank Hong Kong Branch offered its first Certificate of Deposit (CD) successfully, a key step of IB’s operation in overseas financing market. It is a recording move for a Hong Kong branch of same type of commercial banks in offering CD within just more than 2 months after establishment.
Compared with the interests rate of one-year USD notes offered by other joint-stock commercial banks in Hong Kong, the interest rate of IB’s one-year CD is slightly lower than average, equivalent to the interest rate of same period notes closed by big four state-owned Chinese banks.
As the first overseas branch of Industrial Bank, Hong Kong Branch realized that meeting liquidity index is the priority for IB's Hong Kong businesses since the preparation. As prescribed by Hong Kong Monetary Authority, liabilities for less than one month cannot be counted in liquidity index. As the interest rate of deposits is fully liberated in Hong Kong, the competition for attracting deposits of corporate clients is highly fierce and term of deposits is also shorter comparatively. While expanding the sources of liabilities and attracting deposits from corporate clients, the branch also need to offer CD in order to acquire stable liabilities sources thus meeting liquidity regulatory index and building a solid foundation for developing assets businesses.
It is learned that, during the preparation, IB Hong Kong Branch actively conducted market investigation and took the references of other Chinese joint-stock commercial banks’ experiences on managing assets and liabilities. After serious discussion and screening and under guidance and support by the relevant departments from the head office of IB, Standard Chartered Bank has been selected as the establishment bank for IB Hong Kong branch’s first CD program. After the opening of business, Hong Kong branch immediately acquired the authorizations from head office and engaged into the offering. After relevant legal documents had been completed in early May, the branch worked with Standard Charted and the Bank of New Yorker Mellon (agency bank) to sort out connection procedures, and relevant departments had been prepared to monitor the interest rate of financing market in Hong Kong. In the second half of May, as the USD capital is abundant in Hong Kong market and other conditions also favorable to the offering of CD, the branch seized the opportunity and started the procedure.
Industrial Bank believed that, the offering of CD will 1) acquire long term and low cost liabilities sources to effectively meet the liquidity regulatory index, 2) help other banks get a better understanding of IB, which will contribute to the business development, 3) build a solid foundation for subsequent offering with a low interest rate and demonstration effect.