On May 9, the Industrial Bank (IB) hold the "Protect Greens and Water and Construct a Beautiful China - Governmental Institution and Banking Enterprise Matchmaking and Financing Fair for Water Resource Utilization and Protection" (the Fair) in Jinan.In the Fair, IB signed strategical cooperation agreements with an array of water resource utilization and protection leader enterprises including Shandong Water Development Group Co., Ltd., Shandong Water Investment Co., Ltd., Shandong Public Holdings Limited and Shanghai Safbon Water Service Co., Ltd., so as to provide packaged comprehensive financial services integrating investment banking, leasing, cash management and other tailor-made services, jointly build a cooperation platform of environment protection for banks and enterprises and facilitate water protection and pollution harnessing.
As China's first Equator Bank, the comprehensive service capability of IB in green finance has been recognized by partners, which is also a main reason for this successful execution of cooperation agreement. Shandong is a major economic player of China characterized by well-developed industry and agriculture and great demands in water resource and sewage treatment. Since it's located in the North China where drought is commonly seen, the conflict between water resource supply and demand is increasing. The shortage of water resource has become a general problem of Shandong and also a major restraint to national economy and social development. It is especially important for Shandong to reasonably develop, efficiently utilize and effectively protect water resources.
IB actively engages itself in water resource utilization and protection of Shandong province. During recent years, the comprehensive harnessing of Xiaoqing River has been supported by project loans, financial leasing and enterprise bond; favorable social and economic benefits are gained through major hydraulic projects such as auxiliary projects of "South Water to North", comprehensive harnessing of Guyun River in Jining, "Yellow River to Bailang River and Yellow River to Three Gorges" hydraulic projects and "Coastal Plain Reservoir Project".
Taking Shandong Public Holdings Limited as an example, this enterprise is the only water service operator in Jining City with many subsidiaries and business in water supply, sewage treatment and water engineering. It requires lots of funds to support its routine operation. Meanwhile, since it is engaged in regional water service market, it needs to incorporate new water enterprises based on local economic and social development and requirement. It wishes to exchange for stock financing via diversified financing products and reduce its financing cost and debt ratio. By giving full play to its operational advantages as a group, IB analyzed financing demands of customers efficiently and unitedly, provided tailor-made and all-covered financial service schemes and special product schemes for customers, and designed an all-round financial service program covering short-term financing & securities loan, project financing, bank acceptance and financial leasing.
For example, considering the long payback period of water industry, Shandong Public Holdings Limited preferred medium- and long-term financing products to optimize its financing structure. Considering the large scale of pipe network assets that are suitable for financial leasing, IB joined hands with its subsidiary company Industrial Bank Financial Leasing Co., Ltd. to approve and provide banking and leasing integrated service worth RMB 400 million, of which RMB 200 million has been withdrawn. This service fulfills customer demands and "energizes" the company's next step to expand its water utilization and protection market and build itself into a flagship group.
Actually, before signing this agreement, IB has invested in the "Fiver River Harnessing" project in Zhejiang, the "South Water to North" project and other hydraulic and water projects in Shandong as well as other water harnessing, sewage treatment and water supply projects in Jiangsu, An'hui, Hunan, Hubei and Shanxi provinces.
In April 2015, the Action Plan for Water Pollution Prevention and Harnessing (commonly known as "Water Ten Articles"), a highly concerned guidance for nationwide water pollution prevention and harnessing, was officially released. According to calculations, by 2020, the amount of investment for completing all goals of "Water Ten Articles" will be RMB 4 - 5 trillion; the 3-year investment will require RMB 2 trillion. Investments required from all local governments will be RMB 1.5 trillion. "Water Harnessing" is really an arduous task.
How to address such great capital needs? Reporters noticed that banks are still the main source of fund. According to IB data, by the end of March, 2016, the financing balance for water resource utilization and protection is RMB 123.3B out of 408.4B of green financing balance, accounting for over 30%. The financing used for water resource utilization and protection has reached RMB 158.5B to support projects such as industrial water reservation, sea water desalination, sewage plant construction and renovation, sewage pipeline project, sludge treatment, water harnessing, water environment harnessing, recycled water and heavy metal pollution prevention and harnessing.
Meanwhile, as China's most fruitful licensed bank in finance and a modern financial group based on bank as its parent company, IB has been strengthening coordination and linkage in recent years to transform its form from "green bank" to "green financial group". As for the utilization and protection of water resources, in addition to the reasonable application of tradition credit facilities, IB also applies leasing, trust, debit financing and other diversified financing products and give full play to its operational advantages as a comprehensive group, so as to provide diversified financing services for customers in the field of water resource utilization and protection. As for the source of fund, IB issued a 30B financial bond specially for green financial project in 2015; this year, IB was approved to issue a 50B green financial bond used to invest in energy-saving and environmental protection projects.
In addition to green financing business, IB also helps in water pollution prevention and harnessing by active innovation and market-oriented measures and takes the initiative to launch the emission trading solution. It has signed cooperation agreements with 9 national emission trading pilot sites in Hunan, Hebei, Shanxi, Jiangsu and Zhejiang to assist in the design of trading platform and mechanism, development of emission trading system and provision of a series of comprehensive solutions including trading liquidation, settlement, fund management and supporting financing products.
"In order to fully support the development of green finance, facilitate the implementation of energy-saving and environmental protection projects, our bank has arranged a series of policies to provide diversified and fully-covered financial support for enterprises and projects in utilization and protection of water resources." Fang Zhiyong, the general manager of IB Financial Department, introduced that IB has put a batch of key clients in the field of water resource utilization and protection in the list of key strategic clients who will be given preferential services and supports; in the current situation of tight credit scale, IB will arrange a certain amount of special green credit scale and special risk asset scale so as to ensure that the implementation of green financial projects will not be influence by the scale; as for project review and approval, a specialized and fast track has been opened for the approval of green finance.