Industrial and Commercial Bank of China

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Industrial and Commercial Bank of China Limited
Native name
中国工商银行 zhong guo gong shang yin hang[1]
Public; State-owned enterprise
Traded as
ISINCNE1000003G1
IndustryBanking
Financial services
Investment services
FoundedBeijing, China
(1984; 36 years ago (1984))
Headquarters
Beijing
,
Key people
Si Qing Chen (Chairman), [2] Gu Shu (Chief Executive Officer) [3]
ProductsFinance and insurance
Consumer banking
Corporate banking
Investment banking
Investment management
Global wealth management
Private equity
Mortgage loans
Credit cards
RevenueIncrease CN¥725.12 billion
$105.4 billion (2018)[4][5]
Increase CN¥369.32 billion
$53.68 billion (2018)[4]
Increase CN¥298.72 billion
$43.42 billion (2018)[4]
Total assetsIncrease CN¥27.70 trillion US$4027.44 billion (2018)[6]
Total equityIncrease CN¥2.33 trillion
$338.7 billion (2018)[4]
Owner
Number of employees
Decrease 453,048(2018) [8]
Chinese name
Simplified Chinese中国工商银行股份有限公司
Traditional Chinese中國工商銀行股份有限公司
Literal meaningChina Industrial and Commercial Bank, Company Limited by Shares
Alternative Chinese name
Simplified Chinese中国工商银行
Traditional Chinese中國工商銀行
Second alternative Chinese name
Chinese工行
Capital ratioIncrease 12.87% (CET1)[5]
Websiteicbc.com.cn

Industrial and Commercial Bank of China Limited (Pinyin: 中國工商銀行股份有限公司 abb. ICBC) is a majority state-owned Chinese banking company with a multinational activity.

The Tier 1 capital of the bank for the year 2013 was the most of any of one thousand banks, making history, by the bank becoming the first in history, of banks with the most capital, of any headquartered in China.[9][7] Subsequently ranked the largest bank in the world 2017 and 2018, by total assets, [10] (Dec. 31, 2018, US$4027.44 billion [6]), ICBC was positioned at 1st in The Banker's Top 1000 World Banks ranking, every year from 2012 to 2019, [11] and first (2019) on the Forbes Global 2000 list of the world's biggest public companies.[12]

ICBC was founded as a limited company during January 1, of 1984. [13]

History[edit]

1984 - 2005[edit]

By rights of a contradiction within the economic functioning of the government of China, the People's Republic, the State Council of China, during 1983 made a decision to separate certain activities of the government to an exclusively operating organisation, subsequently named the Industrial and Commercial bank of China, [14] established on 1 January 1984.[13][non-primary source needed] The bank received some retail businesses from the Beijing branch of the People's Bank of China, transforming the latter as a central bank.[15] It was followed by other branches of the People's Bank in the rest of China.

ICBC opened a branch in Luxembourg which became the European headquarters of the bank in 2011.[16] ICBC (Europe) S.A. operates a network covering branches in major European cities, namely Paris, Amsterdam, Brussels, Milan, Madrid, Barcelona, Warsaw and Lisbon.[17]

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 - 2008[edit]

Customer base[edit]

As of 2006, ICBC has 2.5 million corporate customers and 150 million individual customers.[18]

IPO[edit]

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

ICBC Beijing branch in 2 Fuxingmen South Street, Beijing
The ICBC building on the Bund, Shanghai
The ICBC building in Xi'an
The ICBC building in Tokyo

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 at that time valued at US$21.9 billion, surpassing the previous record US$18.4 billion IPO by Japan's NTT DoCoMo in 1998.[21] In 2010, Agricultural Bank of China broke ICBC's IPO record when it raised $22.1 billion. China's largest commercial bank was 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 its equity the world's fifth highest among banks, 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.

During July 2007 ICBC was ranked 30th in the world in terms of revenue.[22]

Foreign activity[edit]

In August 2008, ICBC became the second Chinese bank since 1991 to gain federal approval to establish a branch in New York City.[23]

ICBC loans $400 million towards the completion of the Gibe III dam in Ethiopia. Groups that oppose the dam such as International Rivers and Survival International have complained about or have written to ICBC against the dam's funding.[24][25]

2011 to 2017[edit]

On January 24, 2011, ICBC opened a branch office in Madrid, Spain.[26]

On 20 May 2011, Industrial and Commercial Bank of China Ltd. established two branches in Pakistan, one in Karachi, the other in Islamabad. On 18 August 2011, ICBC passed the examination from State Bank of Pakistan and started its business in Pakistan.

During November 2012, ICBC acquires a 80% stake (valued at $600 million) of Standard Bank Argentina, the largest operation of a Chinese bank in Latin America. In Argentina, the bank has ~1,000,000 individual customers, ~30,000 companies of all categories and more than 1600 corporate companies.

During the 2013 Korean crisis, the Industrial and Commercial Bank of China halted business with a North Korean bank accused by the United States of financing Pyongyang's missile and nuclear programs.[27]

It was announced at the end of July 2013 that South Africa's Standard Bank was in talks to sell its markets business in London to the Industrial and Commercial Bank of China for more than $500 million.[28]

On September 24, 2014, ICBC Kuwait Branch officially opened in Kuwait City, capital of Kuwait. As the first and currently the only Chinese bank in Kuwait, the establishment of ICBC Kuwait Branch ended the history of no Chinese bank's presence in Kuwait. Meanwhile, it is also the fourth branch of ICBC in the Middle East, following branches in Dubai, Abu Dhabi and Doha.

As of December 2, 2014, ICBC is ranked the largest bank in the world by assets and by tier 1 capital.[29]

On May 25, 2015, the Company further strengthened its presence in the Middle East and Europe by purchasing[30] Turkey's TekstilBank and forming its ICBC Turkey subsidiary.

On February 17, 2016, the Spanish Guardia Civil raided the offices of ICBC in Madrid, Spain, investigating suspicions of money laundering.[26]

On November 18, 2016, the bank obtained a license to take deposits in Russia.

ICBC Financial Services, the bank's brokerage unit, provided about $88 billion of repo financing at the end of 2015, up from $59 billion two years ago, according to regulatory filings. The figures are before netting agreements that can be used to reduce overall assets and liabilities. Almost all the repo financing that ICBC provides is on U.S. government bonds.[31]

ICBC launched robo-advisor service to its wealth-management operations in 2017.[32][33]

In October 2017, the Bank reported a 3.3 percent rise in its net profit for the third quarter.[34]

Finances[edit]

Accounting[edit]

ICBC has the policy [35] of preparing accounts confirming to the [6] International Financial Reporting Standards, [36][6] accepting specifically criteria IFRS 9 (pertains to the definition and rating of asset, liability, and a number of all of the existing purchasing contracts for non-financial purchases [37]) from January 1 2018. and IFRS 16 (pertaining to lease [38]) from January 1 2019. [35]

Basic figures[edit]

2005[edit]

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%.

Summary[edit]

2003-2018[edit]

Financials in Renminbi[4][39][40][41][42][43][44]


Year 2003 2004 2005 2006 2007 2008 2009 2010
Revenue, bln 107.5 126.7 193.1 181.6 257.4 310.2 309.4 380.7
Net Income, bln 2.473 2.311 33.70 49.26 81.52 110.8 129.4 166.0
Assets, trln 5.279 5.671 6.454 7.509 8.684 9.757 11.79 13.46
Equity, bln 170.5 163.0 253.4 466.5 538.4 602.7 673.9 820.4


Year 2011 2012 2013 2014 2015 2016 2017 2018
Revenue, bln 470.6 529.7 578.9 634.9 668.7 641.7 675.7 725.1
Net Income, bln 208.4 238.7 263.0 276.3 277.7 279.1 287.5 298.7
Assets, trln 15.48 17.54 18.92 20.61 22.21 24.14 26.09 27.70
Equity, bln 956.7 1125 1274 1531 1789 1970 2127 2330

Loans[edit]

Listed to industry[edit]

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

with Collateralization[edit]

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

Non-performing[edit]

At the end of 2004, 19.1% of ICBC's portfolio consisted of non-performing loans.[45] 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.[46] This included an approval for a cash injection of US$15 billion (financed from China's massive foreign exchange reserves) on 28 April 2005.[47] The Beijing-based state company, China Huarong Asset Management, 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%).[48]

Board of Directors[edit]

The company has 449, 226 employees, there are 24 members of the board, with one Chairmen, one Supervisory Board Chairman and one Vice-Chairman. Mr Chen Siqing, the current Chairman, assumed his role [49] after resigning during April 2019 from Bank of China, where he was the Chair, Executive Director and chairman and participating board member within the Strategic Development Committee. Siqing had no disagreement with the Board at the time of his resignation, made purely for the reason of vocational change to ICBC.[50] Yi Huiman, the previous chairman, finished with the company to fulfil the position of chairman at the China Securities Regulatory Commission. [51]

Environmental policy and record[edit]

In 2008 ICBC was the first Chinese Bank to adopt the Equator Principles, an international set of social and environmental standards for financial institutions launched in 2003.[52] It has also adopted the Green Credit Policy launched in 2007 by the Chinese Ministry of Environmental Protection.[53] International environmental groups have criticized ICBC for failing to adhere to its social environmental standards and of being hypocritical, because ICBC is involved in the financing of the controversial Gilgel Gibe III Dam in Ethiopia.[52]

Subsidiaries[edit]

International[edit]

Controversies[edit]

In 2005, the Chinese government arrested several government officials in addition to bankers with regards to the accusation of a scheme to take illegally US$900 million from ICBC.[54]

In November 2015, ICBC Standard Bank, an overseas subsidiary acquired in February of that year, agreed to pay a fine of a maximum of $40 million to UK authorities.[55]

On 17 February 2016, the Spanish Guardia Civil supported by Europol, arrested six executives of the Spanish location of the bank accused of money-laundering.[56]

In 2018, the US Federal Reserve had found "serious deficiencies" of the bank, on, anti-money laundering protections.[57]

Awards[edit]

See also[edit]

References[edit]

  1. ^ Chinese language version and transliteration here does not include the word "Limited", as shown within the introduction; c.f. (foot of p.207) "..ICBC's legal status was changed..it's new name changed to ICBC Limited...", in, Franklin Allen, Darien Huang, Jun 'QJ' Qian, Mengxin Zhao (2012) — p.207 of (Masahiko Aoki, Jinglian Wu; editors) — The Chinese Economy: A New Transition, published by Palgrave Macmillan October 19 2012 ISBN 1137034300, ISBN 9781137034304 - accessdate 2020-02-08 ("limited" sourced originally from within ICBC Business Review, published by ICBC, - accessed 2020-02-06)
  2. ^ Si Qing Chen, 58 Chairman, Industrial & Commercial Bank of China Ltd., published by the Wall Street Journal - accessed 2020-02-07
  3. ^ #1 ICBC, published by Forbes, &, Board of Directors, published by ICBC - accessed 2020-02-07
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  29. ^ [2][dead link]
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  35. ^ a b Offering Circular, p.6, London Stock Exchange - accessdate 2020-02-09
  36. ^ ifrs standards, published by Corporate Finance Institute Education Inc - accessdate 2020-02-09
  37. ^ List of standards, published by IFRS - accessdate 2020-02-09
  38. ^ List of standards, published by IFRS - accessdate 2020-02-09
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  49. ^ Company Info Industrial & Commercial Bank of China Ltd., published by the Wall Street Journal, - accessdate 2020-02-07
  50. ^ Announcement, published and written by Bank of China - accessdate 2020-02-07
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  54. ^ Browne, Andrew (18 January 2005). Written at Hong Kong. "Arrests Made in ICBC Scandal". The Wall Street Journal. New York City. Retrieved 6 February 2020.
  55. ^ Bowers, Simon (27 November 2015). "ICBC Standard Bank agrees deferred prosecution settlement with SFO". The Guardian. London. Retrieved 6 February 2020.
  56. ^ "Directors of Chinese bank arrested in Spain in money laundering probe" (Press release). Europol. 17 February 2016. Retrieved 6 February 2020.
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Bibliography[edit]

Flora Xiao Huang, Horace Yeung (2019) Chinese Companies and the Hong Kong Stock Market, sub-heading 6.4.4, published by Routledge, 30 October 2013 ISBN 1134671113, ISBN 9781134671113

External links[edit]