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Underwriting of Commercial Bank Subordinated Debt

Commercial bank subordinated debt refers to bonds issued by commercial banks. Liquidation of principal and interest is behind the other liabilities and before the equity capital of the commercial banks.
Commercial bank subordinated debt is 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) need to raise capital. Customers must meet the following conditions:
1. A system of loan classification into 5-class, small variation in the classification.
2. Core capital adequacy ratio of at least 5%.
3. Sufficient allowance for impairment losses on loans.
4. Good corporate governance structure and mechanism.
5. No material default and violation in latest three years.
6. Other conditions stipulated by the People’s Bank of China.

Functions and Features
Commercial bank subordinated debt is mainly used to supplement the capital funds. They can help commercial banks increase capital adequacy ratio efficiently.

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.

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
Since 2006, ICBC has successfully underwritten RMB 800 million and RMB 6 billion of subordinated debts for Bank of Hangzhou and Shanghai Pudong Development Bank respectively. Meanwhile, ICBC underwrote RMB 1.5 billion and RMB 1 billion of subordinated debts for Shenzhen Development Bank and Bank of Hangzhou respectively.

Institutional Banking