“In the future, we plan to obtain other licenses like securities and insurance, and establish integrated or specialized financial service institutions overseas by way of setting up new companies or purchasing other companies, so as to continue improving the group-based arrangement and building an all-license integrated business system.” On October 29, the 14th routine press conference of the banking industry on the theme of “speeding up integrated business operation and exciting the transformation and innovation vitality”, which was organized specially for Industrial Bank (IB), was held in Beijing. Chen Xinjian, Vice President and Board Secretary of IB, indicated that the Bank would further intensify the strategic coordination and business linkage across the group, build a modern integrated financial group, and fortify and scale up the advantages in diversified financial services.
It is said that the Bank is exploring the establishment of a special institutions for financial custody service with independent license in the pilot free trade zone, and initiates the research of corporation-based reformation of banking asset management, striving for becoming one of the first group of pilot banks.
As one of the commercial banks with the largest number of financial licenses in China now, IB has 8 business licenses, 4 subsidiaries under its direct control (wholly-owned), and 5 subsidiaries under its indirect control, and investment in 5 companies, basically building a comprehensive financial service group focusing on the principal banking businesses and covering trust, financial lease, fund, consumer finance, futures, assets management, research and consulting, etc.
Speeding up integrated business operation and shaping a group-based corporation
On September 24, an IB’s announcement on resolutions of board of directors attracted extensive attention from the market – the Bank plans to establish Industrial Digital Financial Information Services Co., Ltd. (hereinafter referred to as “IDFIS”) through China Industrial Wealth Management Limited, a fully-owned subsidiary of Industrial Fund under the control of IB, based on the joint investment with other three companies, namely Global InfoTech, Shenzhen Kingdom Technology and Fujian Newland Cloud. In the initial period, IDFIS will, based on technology output, offer financial information cloud service to small- and medium-sized banks, non-banking financial institutions and SMEs, including the outsourcing of financial information and technology service, financial business procedure and financial knowledge procedure under the entrustment of financial institutions, development of application software, operation service, system integration service, etc. Then, it will explore the development of internet finance based on financial cloud, becoming a digital finance enterprises providing information service to the whole society. This is another strategic action taken by the Bank to push forward the group-based development and march into the area of internet finance.
Since its establishment of Industrial Financial Leasing Co., Ltd., a wholly-owned subsidiary, in 2010, IB has kept speeding up its progress in group-based and integrated business operation. At present, with a number of institutions under its control, such as Industrial Trust, Industrial Financial Leasing, Industrial Fund, Industrial Consumer Finance, Industrial Futures, China Industrial Asset Management, Industrial Wealth Management and IERCC, IB has evolved from a single bank into a comprehensive financial service group with many financial licenses.
Moreover, its group members all maintain a desired development momentum, and some of them are capable of lending support to the parent company. By the end of June, with its assets totaling RMB 98.584 billion, Industrial Financial Leasing saw its net profits hitting RMB 505 million in the first half year, leaving other pilot financial leasing companies in the second group far behind in terms of business scale. With the scale of assets under its management reaching RMB 896.172 billion, Industrial Trust made its presence among the top 5 trust companies in China, and the net profits registered by it in the first half year hit RMB 921 million. With the scale of assets under its management reaching RMB 315.195 billion, Industrial Fund ranked No. 22 among the Chinese fund companies two years after its initiation and No. 2 in the industry in terms of the overall profit level of public offering of funds under its management in the third quarter. Established at the end of last year, Industrial Consumer Finance now has its assets totaling RMB 2.294 billion and balance of various loans RMB 1.139 billion...
Behind those figures is that IB has, making use of various licenses and platform resources of the group in a planned manner, kept improving the group-based operation and management models to achieve resource sharing, complementation of advantages, business linkage and coordinated development among different business functions and corporate entities in the group.
According to the introduction of General Manager Wang Shengqian of the Research and Planning Department of IB, the Bank is exerting itself to drive the transformation of business development from “fight by individual solider” to “combat by group army” in the aspects of top-level design and execution: In terms of top-level design, taking group-based development as an important strategy of the entire bank, it has specified the customer-centered business development, and established a comprehensive business operation system cross markets and licenses. Meanwhile, it encourages subsidiaries, bringing into play the group-backed advantages, to ascend into the mainstream in their respective industries and grow into influential brands. In terms of execution, it has pushed the coordination and linkage with subsidiaries, taking it as the means to develop seven core business groups including urbanization finance, environment finance, pension finance, integrated service for small- and medium-sized banking institutions and non-banking financial institutions, direct financing service for the capital market, investment and custody service for assets management, and transaction banking service.
Take bank-trust cooperation as an example. In the first half year, the volume of business linked between Industrial Trust and the parent bank in the three business lines including corporate finance, retail banking and financial market, hit RMB 411.2 billion, and in collaboration, both launched new services to respond to the needs of customers, such as family trust, quasi-perpetual debt, PE assets securitization, banking lease factoring, quasi-REITs, M&A fund, and position trade pass. In the area of bank-lease cooperation, 58 projects were invested via bank-lease linked marketing within the group, worth a value of RMB 27.5 billion, which accounts for more than 80% of the total leasing volume of Industrial Financial Leasing this year. In the area of bank-fund cooperation, the balance of quasi-credit service offered by the Bank hit RMB 27.7 billion, accounting for 17% of the scale of assets under the management of Industrial Fund, and the balance of securities margin trading reached RMB 46.9 billion, accounting for 29%. Of the public offering products issued by Industrial Fund, 16% were sold via the banking channel. Bringing into play its advantages in many areas such as the customization of public offering products, investment research and effective trading in the field of fixed incomes, management of high market value business, low-risk capital occupation of institutional investment, development of innovative products in assets management, Industrial Fund enriched the product supply in collaboration with the financial market line and branches of the Bank. Offering services benefiting potential customers beyond the banking service system, Industrial Consumer Finance enriches the retail credit-based loan products of the group, and achieved a business volume of RMB 359 million in total via the sharing of group resources, which accounts for 30% of the annual value of its newly added loans. Based on the joint marketing with community sub-branches of the Bank, it granted consumption loans worth over RMB 40 million within only two months.
In mentioning the future group-based development planning, Chen said: “Our bank will, from two perspectives, continue building a modern comprehensive financial group and reinforcing and scaling up the advantages in diversified financial services: On one hand, we will continue improving the group-based layout and trying to obtain the licenses for securities and insurance actively, so as to scaffold an all-license comprehensive business operation system. On the other hand, we will further enhance the capabilities of business linkage and coordinated development as a group to achieve ‘dual-wheel drive'.”
He also indicated that the Bank planned to establish integrated financial service institutions, or specialized financial service institutions, for securities investment, assets management and private banking for instance, at abroad by way of setting up new companies or purchasing other companies, so as to push forward its market-oriented, integrated, group-based and globalized development steadily.
Seeking new growth engine with transformation and innovation
Relying on the group-based and integrated business operation advantages, IB has, in recent years, kept accelerating its pace in transformation and innovation, adhered to the direction of “greater investment banking, greater wealth and greater assets management” in terms of business strategies, and shifted itself to a bank characterized by “light capital, light assets, and high efficiency”.
Following the changes in social financing structure, it has actively built the “greater investment banking” system, connected many markets including credit market, monetary market, bond market, equity market, derivative market and bulk commodity market, and provided more diversified and individualized financing services to customers by way of market linkage. As revealed by statistics, the debt financing tools for non-financial businesses offered by the Bank as a lead underwriter hit nearly RMB 1.3 trillion, and it topped similar joint-stock banks in terms of underwriting scale consecutively from 2012 to 2014 and ranked No. 1 in the whole market in terms of the number of financing tools underwritten. Meanwhile, the Bank also witnessed significant progress in other innovative financing businesses such as wealth management-based direct financing tool, assets securitization, M&A loan, financial consultant, and industrial fund, and many innovative businesses were the first issue or one of the first group of issues in the Chinese market, such as the participation in foundation of China Railway Development Fund through the fund subsidiary and establishment of Xiamen Investment Fund for Development of Urban Industries. Up to now, the Bank has offered a total of 45 wealth management-based direct financing tools, worth over RMB 17 billion, and it ranked among the best in the whole market in terms of offering value from 2013 to 2015. In the area of assets securitization, it has successfully offered 7 products, worth RMB 36.961 billion in total, ranking No. 4 in the whole market.
Meanwhile, the Bank has, adapting to the changes in customers’ asset allocation, intensified the coordination and linkage among all major assets management platforms in the group such as banking, fund and trust, exerted itself to offer all-business chain based services characterized by “greater wealth” and “greater assets management” in the aspects of underlying assets procurement, product design, investment operation, channel development, and backstage service, and formed new backbone businesses and profit growth points. By the end of September, the scale of assets managed by the group for customers hit more than RMB 3.3 trillion, approaching the scale of on-sheet assets. With the business scale of its assets custody ranking front in the industry, the net value of custody reached RMB 6.77 trillion, surpassing the scale of on-sheet assets and ranking No. 2 in the whole market.
The Bank has also embraced the age of “Internet+”, and made extensive exploration and bold innovation in a number of areas such as financing, investment, wealth management, transaction banking, and technological service. An ecological circle of internet finance has come into shape preliminarily in the group.
In the area of financing, the Bank established a new model for risk management based on big data, and launched online financing platforms such as “Financing Direct Express”, “Industrial e-financing” for small- and mini-sized enterprises, and “Internet Loan” for personal consumption.
In the area of investment and wealth management, it launched two platforms, namely “Money Manager” and direct bank, and characteristic products such as “Industrial Treasure” and “Manager’s Wallet”, a balance-based wealth management product, building trading platforms for wealth management and circulation of financial assets. The products sold via the “Money Manager” to terminal customers, such as banking wealth management, trust wealth management, precious metal, and fund, were worth over RMB 621.5 billion from January to September this year. With a scale hitting RMB 96.3 billion at the end of September, “Manager’s Wallet” became one of the top 10 monetary funds in China.
In the area of transaction banking, the Bank has put stress on the development of “three direct expresses” covering payment and collection, financing and assets, designed product application scenarios from the perspective of corporate customers, and embedded investment, financing, settlement and other services in an all-sided manner, building an all-in-one financial service model based on internet. By the end of September, the “three direct expresses” has developed 1,232 corporate customers and reached nearly 410,000 end users. By the year-end, it is expected that the number of corporate customers of the “three direct expresses” will be over 1,700, that of end users over 1 million, and the annual trading volume over RMB 100 billion.
In the area of technological service, it has kept scaling up the technology output of the bank-bank platform, committing itself to becoming the largest supplier of commercial banking information system in China. Up to now, it has signed technology output agreement with 265 banks, for 131 of which, IB has built information system and offered operation and maintenance service.
Since last year, the Bank has furthered cooperation with leading internet enterprises such as Baidu and Ant Financial Services Group in the areas including big data application, internet wealth management, and network payment. The assets service in cooperation with Ant Zhaocaibao hit over RMB 9 billion just since this June.
Intensified efforts to “boost the real industry”
With sharp tools, one's work must be done well. IB speeds up integrated business operation and excites the transformation and innovation vitality, which is also helpful for it to further serve the national strategy and the real economy.
It is learnt that the Bank now basically establishes institutions in all provinces and municipalities covered under the “Belt and Road Initiative” planning. Setting up 14 branch offices in free trade zones, it is actively pushing forward the establishment of a special institution for financial custody service with independent license in Fujian FTZ and exploring the establishment of branch offices or representative offices in major countries and regions along the “Belt and Road”. Meanwhile, it has increased input of relevant resources, allocated special resources for key customer groups and businesses, and set up green channel of approval. For instance, it has arranged a scale of RMB 20 billion as special loans and RMB 20 billion as special risk assets for the integrated projects of Beijing, Tianjin and Hebei. Now, 117 key projects have been selected, and it plans to increase extension of RMB 100 billion within the year. Meanwhile, the Bank has, integrating its multi-license resources, made innovation to offer diversified financing supports for major projects supported under national strategy by way of industrial fund, asset securitization, banking-leasing integration, etc. For example, it has participated in foundation of China Railway Development Fund, and contributed in the Silk Road Gold Fund, the largest special fund in China worth hundreds of billion RMB.
By the end of September, the Bank has lent support to 128 enterprises engaging in cross-border trade with countries along the “Belt and Road”, 8 ones making investment and doing merger and acquisition in the above countries, and 77 ones engaging in the construction of infrastructure including major harbors, railways, highways, airports, cross-border logistics hubs and harbor industries. While starting FTZ innovative services smoothly such as cross-border settlement, cross-border direct loan, outward security for offshore lending, cross-border trade financing, and cross-border capital pool in home and foreign currencies, the entire bank has witnessed an amount of cross-border settlement up to USD 96.634 billion, and an amount of cross-border trade financing balance up to RMB 149.616 billion.
The Bank has also kept intensifying the innovation in credit products for small- and mini-sized enterprises and increasing credit extension to support “mass entrepreneurship and innovation”, made use of its financial licenses and market resources to lend support to small- and mini-sized innovative start-ups with comprehensive financial services integrating debt financing, equity financing, settlement and wealth management, and financial consultant, launching special products and service solutions for small- and mini-sized enterprises such as “Start-up Loan”, “Easy & Fast Loan”, “Consecutive Loan”, and “Trading Loan”. By the end of September, the balance of loans granted by IB to small- and mini-sized enterprises hit RMB 537.4 billion, up by 25%.