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Introduction
Financial bonds for commercial banks are marketable securities issued by commercial banks (established in China by law) in the national interbank bond market, where the principal and interest are repaid under given terms.
Financial bonds for commercial banks are one kind of financial bonds. Offering period and type of bond can be flexibly designed according to the financing needs of issuers.
Target Clients
Commercial banks established in China (excluding Hong Kong, Macau and Taiwan) with good performance, need to raise funds in the mid-to-long term. Customers must meet the following conditions:
1. Good corporate governance mechanism;
2. Core capital adequacy ratio of at least 4%;
3. Latest three years of profitable track record;
4. Sufficient allowance for impairment losses on loans;
5. Risk Control Indicators comply with the regulatory rules;
6. No material default and violation in latest three years;
7. Other conditions stipulated by the People’s Bank of China.
Functions and Features
Financial bonds for commercial banks allow commercial banks to: 1. raise stable funds over mid-to-long term; 2. improve core liabilities ratio, liquidity risk and interest rate risk; 3. reduce capital cost; and 4. enhance efficiency. They are good alternatives for existing liabilities and keep the assets and liabilities stable and good solution for matching between mid-to-long term assets and liabilities to increase risk tolerance. The flexible and stable funds raised through issuance of financial bonds can be used for assets portfolio optimization and expansion in mid-to-long term investment business.
ICBC Advantages
1. Strong underwriting: ICBC is a Class A bond underwriting member under the Ministry of Finance, Class I trader of People's Bank of China's open market, the earliest commercial bank in China to be qualified for the underwriting of non-financial corporate debt instruments. For years ICBC has been named excellent underwriter and excellent trader by the Ministry of Finance and People's Bank of China.
2. Rich experience: ICBC has a team of professional staff experienced in bond underwriting, and a comprehensive, effective internal mechanism in place for customer service, credit risk assessment and underwriting execution.
3. Good relationship: ICBC maintains good contact with regulatory authority and good relationship with the investors. ICBC is able to underwrite the financial bonds issued by commercial banks.
Product Price
Offering interest rates for the financial bonds issued by commercial banks depend on the term, credit rating of the customers and market conditions, referencing market price and opinions of regulatory authority.
Service Channel and Hours
Commercial banks are welcomed to contact ICBC directly during office hours, based on own financial requirements.
Steps
1.Verify: Customers must supply application documentation to ICBC required by the regulatory authority. ICBC will proceed due diligence, assess credit risk and sign relevant agreements with customers.
2. Approval: ICBC sends the application documentation to China Banking Regulatory Commission and People’s Bank of China for approval.
3. Issuance: Once approved by China Banking Regulatory Commission, ICBC will proceed to issue the bonds.
Successful Cases
In recent years, ICBC has successfully underwritten RMB 30 billion of financial bonds for Industrial Bank, RMB 12 billion for China Minsheng Bank, and the first common financial bond in China for city commercial bank - RMB 10 billion of financial bonds for Bank of Beijing. ICBC also successfully issued RMB 5 billion of financial bonds for Bank of Shanghai.
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