Corporate Banking

Business Cases

(I) Fast & Quick Loan

Mr Zhang founded a small technology enterprise in a hi-tech park of Chengdu. 1 year after plant construction and operation, he submitted application for financing to solve capital shortage in raw materials procurement.

We’ve made overall assessment to Mr Zhang’s personal and corporate assets, which include a standard plant (valued at RMB 3 million Yuan), an urban apartment (valued at RMB 2 million Yuan), a rural residence (valued at RMB 1 million Yuan), an imported car (valued at RMB 0.7 million Yuan), and cash, stock, wealth management products and treasury bond (valued at RMB 1.8 million Yuan), totaling RMB 8.5 million Yuan (the two real properties and the plant count as RMB 6 million Yuan as collateral).

Our marketing team scored the comprehensive condition of enterprise and individual under 9 items of Fast & Quick Loan scorecard, including: enterprises credit standing, loan to assets ratio, collateral status and disposal ability, employment and operation condition. The result was scored 72.85 at the same day, corresponding to a pledge rate of 80%. The approval was made within 3 business days, and the enterprises eventually received RMB 4.8 million Yuan under Fast & Quick Loan (RMB 6 million collateral x 80% = RMB 4.8 million Yuan).

(II) Consecutive Loan (Short Term Working Capital Loan + Consecutive Loan)

Mr Wang’s company mainly produces electronic components under a good operation condition. The company had short term current capital loan of RMB 4 million Yuan, and the capital utilization rate was very high due to small size of business, therefore it rarely had money retained or additional guarantee. Although Mr Wang already received renewed credit extension, but according to original procedure, the loan must be paid up before issued again. For this, Mr Wang may have to suspend original production plan and reduce production, so as to raise capital for repayment. One of our account managers, Mr Liu learned about the situation, and proposed Consecutive Loan to Mr Wang to support his subsequent loan transaction. Finally, Mr Wang chose the product portfolio of “short term working capital loan + consecutive loan”, and agreed to aggregate its most settlement amount into the Bank by stages within 3 month.

Upon the expiration of renewed loan, Mr Wang achieved the connection of repayment at maturity and repayment, thus avoiding the blank period between repayment and new loan, securing the continued use of loan fund and development of its operation plan.

(III) Trading Loan + Consecutive Loan (Combined Application)

Mr Jiang’s business is a food company integrating the production, supply and sales of green and pollution free food, providing one package service including product selection, rough processing, packaging and delivery. It mainly purchases quality food materials from fresh food distribution center, rural vegetable base and farmer, and delivers them to large supermarkets, convenient stores and community direct stores after processing and packaging. Recently, the company accelerated the expansion of community direct store, and the rents and initial expenses of several new stores made capital tense. On the other side, as the spring festival is coming, more inventories and procurement are required, thus leading to much more payment to upstream supplier, and a fund of nearly RMB 5 million Yuan is required in short time. The company has limited fixed assets, and as the plant had been pledged for prior financing, there is not sufficient collateral for pledge currently. As the capital utilization rate is very high, it rarely has money retained in daily operation. Once the loan expires, it has to suspend opening new store and reduce capacity so as to raise capital for repayment. As a result, the whole operation plan will be interrupted. The company hopes to gain long term and stable financing from the Bank, so as to continue the use of loan fund and secure the stability of whole operation.

As his food company was using the Bank as the main settlement bank, the Bank evaluated financing quota based on the stable settlement amount of stable counterparty in the Bank’s settlement account, and released collateral-free Trading Loan of RMB 5 million.

As Mr Jiang’s company had met the Bank’s requirement on settlement aggregation under Consecutive Loan when conducting Trading Loan, we conducted “Trading Loan + Consecutive Loan” for the customer, therefore he can reuse the 5 million Trading Loan and need not to repay the principal upon expiration.

(IV) Fast & Quick Loan + Consecutive Loan+ Trading Loan (Combined Application of Three Products)

Mr Zhong has long been involved in the R&D of applications for cell phone, and intends to start a small technological business which will be located in an office building and engaged in the R&D of applications for cell phone. As rent, salaries and procurement of electronic equipments require large amount of money at the start-up, Mr Zhong pledged an urban apartment with high potential of appreciation to the Bank. After assessment, the apartment was valued at RMB 5 million Yuan. Mr Zhong expressed that the capital investment needs certain continuity and stability for the development of software, and hoped we can provide programme that secure the long term use of loan fund.

Based on our judgment and assessment on Mr Zhong’s business, we proposed the combination of three key products for small- and mini-sized enterprises, thus giving full play to the potential of Fast & Quick Loan, Consecutive Loan and Trading Loan.

(1) First, taking the urban apartment valued at RMB 5 million as the collateral, it scores 90 points based on Scorecard. The pledge rate of the property was improved increased to 100%, which allows Mr Zhong to receive first RMB 5 million Yuan under Fast & Quick Loan, and build bank-enterprise cooperation with the Bank quickly.

(2) At the same time, we the Bank provided Consecutive Loan in support of Fast & Quick Loan, which effectively extends the time limit for Fast & Quick Loan. And the continued continuous use of fund “without repayment” secured its stability of overall capital operation, and lowered loan transfer cost. It also required Mr Zhong to use the Bank as the main settlement bank and aggregate its settlement to the Bank.

(3) With the application of Consecutive Loan at earlier stage, Mr Zhong’s business settlement had aggregated to the Bank. When the business needed capital support subsequently, the Bank extracted stable settlement amount from its settlement in the Bank and evaluated amount under Trading Loan, provided it with another collateral-free loan of RMB 5 million Yuan.

Under traditional loan, the pledge rate for a property of RMB 5 million Yuan is usually less than 70%, which generates a loan of only RMB 3 million Yuan. However, with the combination of IB’s three key loan products to small- and mini-sized enterprises, the property pledge of RMB 5 million Yuan eventually allows the applicant to receive a loan of RMB 10 million Yuan that could be used continuously in long term without repayment of the principal (Fast & Quick Loan: RMB 5 million Yuan, Trading Loan: RMB 5 million Yuan).

(V) Equipment Mortgage Loan for Small Enterprises

Mr Wei owns a printing house which has been established for three years. The printing house produces various kinds of picture albums, prints playing cards, hand bags, color copies, full size posters, letter papers and envelops and color pages as well as non-carbon autotype. As the company has been promoting its products to Africa, Latin America and other regions in recent years and the production and orders keep increasing, Mr Wei submitted application to the Bank for financing to add printing equipment.

After negotiation with equipment supplier, Mr Wei signed contract with supplier and imported high quality printing machine. By valid and full amount guarantee, Mr Wei issued import L/C, and after the equipment was arrived, declared with customs offices and installed, the Bank, based on the pledge of such printing machines, provided him with a loan equivalent to 70% of purchase price for equipments. The loan can be repaid in 3 years, thus reducing their pressure on production, and ensuring their regular plans such as raw material procurement.