Icbc Bank Of China

Industrial and Commercial Bank of China Ltd. ( ICBC ) (simplified Chinese: 中国工商银行 ; traditional Chinese: 中國工商銀行 ; pinyin: Zhōngguó Gōngshāng Yínháng, more commonly just 工行 Gōngháng) is China's largest bank and the largest bank in the world by market capitalization. It is one of China's "Big Four" state-owned commercial banks (the other three being the Bank of China, Agricultural Bank of China, and China Construction Bank). It is the largest bank in the world in terms of market value, the world's largest bank by deposits, and the world's most profitable bank.

It was founded as a limited company on January 1, 1984. As of 2009, it had assets of RMB 11 trillion (US$1.6 trillion), with over 18,000 outlets including 106 overseas branches and agents globally. In July 2007, with a market capitalization of US$254 billion, it became the world's most valuable bank after a surge in its share price, overtaking Citigroup.

History

2005

The bank's Hong Kong operations are listed under the name ICBC Asia. It has purchased the Hong Kong subsidiary of Fortis Bank and rebranded it under its own name on 10 October 2005.

2006

In the runup to its planned initial public offering, on 28 April 2006, three "strategic investors" injected US$3.7 billion into ICBC :

• Goldman Sachs purchased a 5.75% stake for US$2.6 billion, the largest sum Goldman Sachs has ever invested .
• Dresdner Bank (a wholly owned subsidiary of Commerzbank) invested US$1 billion .
• American Express invested US$200 million .

World's largest IPO

ICBC was simultaneously listed on both the Hong Kong Stock Exchange and Shanghai Stock Exchange on 27 October 2006. It was the world's largest IPO to date, surpassing the previous record US$18.4 billion IPO by Japan's NTT DoCoMo in 1998. China’s largest commercial bank is also the first company to debut simultaneously on both the Hong Kong and Shanghai stock exchanges.

ICBC raised at least US$14 billion in Hong Kong (H-shares) and another US$5.1 billion in Shanghai (A-shares). Due to heavy subscriptions, the greenshoe (i.e. over-allotment) placements were exercised and ICBC's take rose to US$21.9 billion (17% of ICBC's market value before the IPO), divided in US$16 billion in Hong Kong and US$5.9 billion in Shanghai. Following the global offering, the free float of shares was 22.14% of the market capitalization.

At the end of its first day of trading, the bank’s shares closed up almost 15% at HK$3.52 in Hong Kong, compared with the listing price of HK$3.07, which was set at the top of the indicative range due to the strong demand. According to Bloomberg, ICBC’s market capitalisation at the end of trade based on its Hong Kong shares was US$156.3 billion, making it the world’s fifth largest bank, just behind JPMorgan Chase. Meanwhile, ICBC’s Shanghai-listed A-shares recorded more modest gains and ended up 5.1% from the offering price of RMB 3.12.

2008

In August 2008, ICBC became the second Chinese bank since 1991 to gain federal approval to establish a branch in New York City.

At the 2008 ALB China Law Awards , ICBC was crowned:

• In-House of the Year - Banking & Financial Services In-House Team of the Year
• In-House of the Year - China In-House Team of the Year

In 2008, ICBC strengthened its position as the world's largest bank by market value and became the most profitable bank in the world).

Basic figures

ICBC has 2.5 million corporate customers and 150 million individual customers. In 2005, net profit was up 12.4% to RMB 33.7 billion, and the total loan balance was RMB 3,289.5 billion. Total liabilities are RMB 6,196.2 billion, up 11.2%. Delinquent or non-performing loans (NPL) total RMB 154.4 billion, a significant reduction although the figures are widely regarded as being somewhat higher than officially stated. It has an NPL ratio of 4.69% and a capital adequacy ratio of 9.89%.

In addition to being ranked 1st among global banks in terms of market capitalization, deposits, and profits, as of June 29, 2009, ICBC is ranked the 17th largest bank in the world by assets and 8th in the world by tier 1 capital. In July 2007, when the bank became the largest bank by market capitalization, it was ranked 30th in the world in terms of revenue.

Loans by industry

In millions of Chinese RMB (Yuan) in 2005:

• Manufacturing: 662,376, 20.1% (28.7% in 2004)
• Transportation, storage, postage & telecommunications: 367,371, 11.2% (10.2% in 2004)
• Power, gas and water: 281,179, 8.6% (7.0% in 2004)
• Retail and wholesale, catering: 265,906, 8.1% (6.9% in 2004)
• Property development: 194,024, 5.9%, (5.6% in 2004)
• Social service organization: 103,070, 3.1%, (3.2% in 2004)
• Construction: 89,666, 2.7%, (2.1% in 2004)
• Other industries: 313,804, 9.5%, (12.1% in 2004)
• Discounted bills: 392,717, 11.9%, (8.4% in 2004)
• Personal loans: 515,042, 15.7%, (13.1% in 2004)
• Overseas business:104,398, 3.2%, (2.7% in 2004)

Total: 3,289,553

Loan collateral

• Secured by mortgages: 34.1%
• Secured by other collateral: 22.1%
• Guaranteed loans: 23.3%
• Unsecured loans: 20.5%

Non-performing loans

At the end of 2004, 19.1% of ICBC's portfolio consisted of non-performing loans. In order to clean up ICBC's balance sheet and prepare it for overseas listing, the Chinese government orchestrated a series of capital injections, asset transfers, and government-subsidised bad loan disposals that eventually cost more than US$162 billion. This included an approval for a cash injection of US$15 billion (financed from China's massive foreign exchange reserves) on 28 April 2005. The Beijing-based state company, China Huarong, helped ICBC dispose of its bad loans. As the 2005 annual report records, just under 5% of loans are classified as non-performing, in comparison with the majority of western banks who have lower NPL ratios (US commercial banks around 1%) .

See also

• List of asset management companies of the People's Republic of China

References

1. ^ ^{a b c} http://www.icbc.com.cn/ICBC/About%20Us/Brief%20Introduction/
2. ^ ^{a b} http://www.icbc-ltd.com/NR/rdonlyres/E8605AE9-0A88-43E5-BB68-0AF734977A96/0/2008AnnualReport_Hshare.pdf
3. ^ http://www.icbc-ltd.com/NR/rdonlyres/74CF5126-A682-4066-BE15-3D8B26E6FCC0/0/2009%E5%B9%B4%E7%AC%AC%E4%B8%80%E5%AD%A3%E5%BA%A6%E6%8A%A5%E5%91%8A%E8%8B%B1%E6%96%87.pdf
4. ^ http://www.ft.com/cms/s/0/ea450788-1573-11de-b9a9-0000779fd2ac.html
5. ^ China’s biggest bank goes to market, Financial Times
6. ^ China ICBC tops Citigroup as world's biggest bank
7. ^ http://www.federalreserve.gov/newsevents/press/orders/orders20080805a1.pdf
8. ^ www.legalbusinessonline.com.au
9. ^ ICBC News (25 March 2009). "Industrial and Commercial Bank of China Limited Announces 2008 Annual Results" . http://www.icbc.com.cn/icbc/icbc%20news/industrial%20and%20commercial%20bank%20of%20china%20limited%20announces%202008%20annual%20results.htm . Retrieved 2009-07-30 .  
10. ^ http://www.chinadaily.com.cn/china/2006-09/27/content_698025.htm.
11. ^ http://www.thebanker.com/cp/20/T1000_25_Tier1&TotalAssets.gif
12. ^ http://news.hereisthecity.com/news/business_news/6935.cntns

External links

• (English) Financial Reports
• (Chinese) Industrial and Commercial Bank of China

• www.icbc.com.cn

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