Date: June 3, 2017 Source: CBN Weekly
（http://www.yicai.com/news/5294624.html）
In March, 2013, the “Huangpu River Dead Pig Event” in Shanghai put Jiaxing City, a city located on the upstream, under unprecedented pressure.
Jiaxing, a typical riverside city and the most important water source of Shanghai, is interlaced with more than 13000 rivers and brooks. With the development of industry and breeding industry, the water quality of Jiaxing has been deteriorating and water pollution was once an ecological disadvantage for the economic and social development of Jiaxing. The “Huangpu River Dead Pig Event” even rang the alarm in terms of ecology. Under such a circumstance, Jiaxing has launched a battle of water harnessing lasting for many years.
Water harnessing cannot be done without fund support and financial power is indispensable. As the benchmark bank of green finance in China, Industrial Bank (IB) has taken active part in it. “We visited Jiaxing Municipal Government, hoping to facilitate the water environment harnessing with local government.” Peng Guanghui, the vice president of IB Hangzhou Branch, introduced that, in November 2013, IB and Jiaxing Municipal Government signed the Strategic Cooperation Agreement on Promoting the “Water Environment Harnessing” of Jiaxing City, in which a green channel is opened for reviewing and approving green finance projects, so as to provide powerful financial support for water harnessing in Jiaxing by using credit, non-credit green financing instruments and diversified products. By the end of 2016, IB has accumulatively invested about RMB 12 billion into this field.
Jiaxing is not the only city requiring harnessing. In recent years, haze, water pollution and other environmental issues have become more and more prominent, making green development a national strategy. As the backbone of national economy, finance should take the lead. However, green finance cannot develop only by the enthusiasm of financial institutions. Only by turning enthusiasm into a business mode of banks can green finance truly become sustainable. The sustainable road of IB is really one that shows obligations in profits.
Luo Shiyi, the GM of Green Finance Dept., IB, revealed when being interviewed by our reporter that by the end of April 2017, IB has accumulatively provided green financing fund of over RMB 1.2 trillion for more than ten thousand energy saving enterprises or projects, with the financing balance of RMB 567 billion, the NPA rate of 0.38%, down by 0.11% compared with the beginning of the year. The asset quality is leading the industry. “Green finance can not only bring environmental and social benefits, but really represents quality assets with outstanding economic benefits.” said by Luo Shiyi.
Led by Green Finance to Achieve Economic and Environmental Benefits
The past two years witnessed soaring growth of green finance in China. The year of 2016 is even regarded as the first year of the development of China’s green finance. Many financial institutions start to focus on this sector and banks are paying more and more attention to the investment into green finance.
For example, last year, IB and Shanghai Pudong Development Bank were approved to issue a green financial bond of RMB 50 billion; China Development Bank, one of the four policy banks of China, as an important provider of green credit for long, issued the first stage of green financial bond in February 2017 to raise funds specially used for environmental protection, energy conservation, clean energy and clean transportation; Agricultural Bank of China, one of the four major banks of China, has been paying much attention to the environmental sustainability, with a green credit balance of more than RMB 500 billion whose growing speed is higher than that of corporate lending throughout the bank by 2.63%.
In terms of green finance, IB is second to none. For the past 11 years, IB has been undertaking the green finance. In 2016, IB launched the first energy efficiency financing product, then released the energy-saving and emission-reducing loans, carbon finance, emission right finance, low carbon credit card. After that, IB became China’s first bank who promised to apply the equator principle, then IB set up specialized operations and formed a collective, multi-layered and comprehensive system of green finance products and services. The green finance has become a symbol of IB and IB has, in turn, become a leader of green finance in China.
In October 2008, IB officially promised that it would adopt Equator Principles and become the first equator bank in China. By the end of April 2017, IB has accumulatively made judgment on 978 projects based on the Equator Principles, among which 316 are suitable for Equator Principles with the total investment amount of RMB 1.2216 trillion.
Unlike subsequent banks who place green finance in different business segments, IB has formulated a sophisticated organization structure and system of green finance from the top level.
In terms of the board of directors, a Steering Group of Equator Principles has been formed by the chairman of the board, presidents of banks, vice presidents and the secretary of the board.
In terms of the group, a special facilitating group, composed of all relevant department of the head office and other branch companies, has been formed to drive the development of green finance. The headquarters has set up the Green Finance Department in charge of product design, marketing promotion and brand building of green finance products, as well as the organization, coordination and connection of specific affairs. 6 professional teams have been set up, including professional study, product innovation, marketing management, project evaluation, operation management and brand building.
All branch offices have set up green finance departments or corresponding operations equipped with full-time product managers. A professional and China’s largest team of green finance, composed of nearly 200 employees, has been established, supported by a series of incentives.
On the strength of this system, organizational structure, business process and professional team, the green finance of IB has been soaring up with outstanding asset quality. According to data, by the end of April 2017, the NPA rate of green loan was only 0.38%; the asset quality rivals that of housing loans which are regarded as the best assets in the banking credit and loan system. This is more prominent in the “lack of assets” during the economic downturn.
Comprehensive measures facilitate local environment restoration
In addition to dedication, the control of asset categories is also an important factor to control the NPA rate. As introduced by Luo Shiyi, IB now expands the business of green finance in a way that “actively provides supporting financing products for local governments in green projects; fulfills the financing demands of medium- and large-sized enterprises; innovates in green finance instruments.”
For example, the IB Jiaxing Branch has taken the opportunity of “water environment harnessing” project to provide a credit line, amounting to RMB 20 billion, for the water environment harnessing project of Jiaxing City. As of 2016, IB has invested RMB 12 billion into the “Five River Harnessing” Project.
In Zhejiang Province, IB Hangzhou Branch has actively seized the opportunity arising from the “Green Zhejiang” development strategy proposed by Zhejiang Provincial Government and Party Committee and got involved in the important phased tasks of the government. In 2013, the branch signed a strategic cooperation agreement of Zhejiang Provincial Bureau of Environmental Protection in which IB promised to provide a green loan no less than RMB 30 billion in the next three years; the branch signed a strategic cooperation agreement with Wenzhou government involving a loan of RMB 100 billion used for environmental harnessing projects; the branch signed a framework agreement with Yandangshan Scenery and Tourism Management Commission, involving a loan of RMB 5 billion used to improve the tourist attraction; the branch signed a special industrial fund cooperation agreement with Jiashan County Government, involving a loan of RMB 5 billion used to restore the environment of the town. Now Hangzhou branch has signed similar agreements with Hangzhou City, Jiaxing City, Wenzhou City as well as nearly 20 counties and districts.
“In order to support the local government to harness the pollution from agricultural livestocks and prevent the reoccurrence of the ‘Dead Pig Event’, we have invested RMB 1.42 billion to 4 pig house demolition and harnessing projects since 2013. Now the breeding stock of pigs has been reduced to 187,000 at the end of 2016 from 2.731 million at the end of 2012. Pig houses are now transformed into gardens, farms and orchards.” said by Xu Hui, the president of IB Jiaxing Branch.
According to information, by the end of April 2017, the environmental harnessing projects of government supported by IB Hangzhou branch have been distributed to 65 counties and district with the total investment amount of more than RMB 80 billion.
“During these years, our bank has invested nearly 100 billion in the construction of the ‘Beautiful Zhejiang’, and fully engaged ourselves into ‘Five River Harnessing’, ‘Beautiful Countryside’ and other key environment projects. Meanwhile we communicated the idea of green finance, facilitated the establishment of Zhejiang Green Finance Committee, making us the practitioner and leader of local green finance.” said by Shen Weiqun, the president of IB Hangzhou Branch.
Multi-facet cooperation supports corporate growth
To support the needs of enterprises in green financing, IB selects the best resources to growth with enterprises.
Shuangliang Group is a large-scaled comprehensive group integrating energy-saving equipment, new chemical materials and other industries. Miao Zhiqiang, the secretary of the party committee and the vice president of the group told the reporter that Shuangliang Group created business relation with IB Wuxi Branch as early as in 2005 and now the cooperation keeps expanding. “IB has exerted its advantages of multi-license operation to support the asset restructuring and business structure adjustment of Shuangliang Co-energy, a listed company subordinated to the group. In November last year, IB approved a green acquisition fund as much as RMB 200 million with a term of 5 years to support the acquisition of Shuangliang Co-energy.” As introduced by Miao Zhiqiang, IB would subsequently the acquisition fund of Shuangliang Group, and the ABS project of its affiliated NEEQ enterprise, Huiju Technology. In recent years, both parties have expanded their cooperation in green financing. Now IB has totally granted RMB 1.5 billion of credit line and RMB 650 million of exposure line to Shuangliang Group.
Xuzhou Xinshui State-owned Asset Operation Co., Ltd., a company engaged in the operation and management of water (hydraulic) assets of the city, is also a beneficiary of IB’s green financing product. Shi Feng, the vice general manager of the company, said that IB has provided green financing to the company totaling RMB 2.278 billion since their cooperation in 2010, which greatly supported the reconstruction and expansion of water pipes as well as other projects.
During the process of serving enterprises, IB has always put mind on innovation, so as to create an array of financing channels for enterprises.
IB Wuxi Branch, as an example, granted the first energy efficiency loan in Wuxi to Jiangsu Tianshan Cement Co., Ltd. In 2008, which has greatly facilitated the company to reduce energy consumption and carbon emission. In 2012, Wuxi Branch released the first emission permit pledge loan in Jiangsu, further enriching the connotation of green finance business. In 2016, IB invested in China’s first green ABS of non-listed company - Bus Operation Charge Usufruct Asset Backed Special Plan of Wuxi Communications Industry Group. The raised fund is mainly used for the purchase of public buses (mainly new energy buses and clean energy buses) and the operation of bus facilities.
IB also leveraged industrial fund to facilitate the establishment of some environment protection private equity funds. For example, IB Wuxi Branch successfully participated in the industrial fund project of Wuxi Guolian Group with an amount of RMB 10 billion, and set up the “Huaguang Low Carbon Industrial Fund” amounting to RMB 1.5 billion together with Huaguang Boiler Co., Ltd., a subsidiary company of Guolian Group, by taking the opportunity of the asset restructuring of Huaguang.
Yang Jingbo, the board chairman of Zhejiang Provincial Environmental Protection Group, said to the report that the group is currently cooperating with IB Hangzhou Branch to set up an environmental protection equity fund within the framework of state-owned capital.