In China, companies are looking for ways to capitalize their assets and "go global". This poses a huge demand of financial services related to fund-raising such as private placement, IPO, bond, cross-border mergers and acquisitions. ICBC, being the first-mover in investment banking business among the domestic commercial banks, leverages its overall competitive advantages to promote development advance of both investment banking and commercial banking. In the first half of this year, ICBC has secured more than 23,500 investment banking customers and a business revenue of RMB 13.16 billion, up 51.8% from the year-ago, where revenue from domestic investment banking business surged 48.9% year-on-year to RMB 12.38 billion. ICBC continues to edge ahead of its peers. Today, investment banking is one of the most important sources of income from the intermediary business and plays an increasing role in bolstering the revenue structure of the Bank.

Driving investment banking and commercial banking in parallel is one big agenda item of ICBC to promote investment banking business in China. Under a full life-cycle service model of "bond + equity", "investment banking + commercial banking", the Bank combines the two services to cater to the demand of financial services from the companies in different stages of growth, "establishment, growth, IPO preparation, go public". In the offering of investment banking services, ICBC focuses on the fund-raising requirement of the companies, offering services such as equity financing, restructuring, merger and acquisition, and overseas IPO. Subsequent services including commercial banking, which are deposit, loan, trade finance, settlement, cash management, are provided to customers to ensure seamless connection between direct finance services and indirect finance services.

During the first six months of this year, ICBC's investment banking business plays a dominate role in offering another alternative of obtaining funds for borrowers against the tightened supply of credit loan. Especially equity financing, growth of the business has been impressive. ICBC has a complete service offering, where ICBC acts as the administrating bank for equity investment fund, consultant for private placement, IPO or direct investment. During the first half of the year, the Bank has concluded 32 transactions acting as the administrating bank and raised over RMB 10 billion through private placement for the borrowers, driving the year-on-year growth in revenue to nearly 7-fold. Meanwhile, ICBC has been successful in underwriting and offering business. The Bank has gained a dominate share of the market by underwriting corporate debt instruments to a tune of RMB 136.5 billion during the first six months of this year.

Companies in China are asking for more investment banking services in and outside China as many of them "go global". In light of this, ICBC takes full advantages of holding an overseas investment banking license to open business not allowed in China, such as stock underwriting, brokerage and dealing. Another move is to bring the benefit of the synergy by leveraging its overseas platform to assist domestic branches in looking for new growth points. Today, ICBC has a global service network covering 29 countries and regions. By extending the nine domestic product lines of investment banking services outside China, ICBC acts first to provide overseas investment banking services to "go global" companies starting from cross-border investment, cross-border acquisitions, overseas IPO, structured finance, and international syndicated loan. ICBC branches, in China and overseas, are working together to provide a range of comprehensive investment banking services for Chinese companies to "go global". In January-June period of this year, ICBC focused on a batch of large projects (Wuhan Iron & Steel Group's acquisition of iron mine in Madagascar, GCL Group's acquisition of a power plant in China), generating a revenue of RMB 580 million, or 94% year-on-year, from M&A business.

ICBC International, the wholly-owned investment banking arm of ICBC in Hong Kong holding a full license, within a short period since its opening to business in 2009 is showing its great potential to win large international IPO mandate and become a formidable player in the international capital market. ICBC International is now the flagship of ICBC's overseas investment banking business. In the first half of this year, ICBC International successfully participated in the IPO of Prada and Ferragamo, the only Chinese investment bank joining the underwriting team for the two global luxury names at the same time. Besides, ICBC International also underwrote 4 bond issues, including the offering of RMB 300 million worth of renminbi-denominated bonds for YFY Cayman Company, the first RMB bonds issued in Hong Kong by a Taiwanese firm. ICBC International has total assets of USD 1.07 billion as of end of June and posts a first-half net gain of USD 16.52 million.

Background

Investment Banking Business

Investment Banking business mainly involves the services on issuance, underwriting of bonds (primary market), transaction brokerage after issuance (secondary market), corporate restructuring, financial advisory on merger and acquisition and financing arrangement, project finance, and asset securitization. Management system in China is based on separate operation. Hence, commercial banks mainly engage in non-licensed services such as, restructuring/M&A, syndicated loan arrangement and management, advisory on direct investment/equity private placement, advisory on corporate bond issuance, advisory on structured finance, asset securitization, credit asset transfer, underwriting of corporate short-term bond/mid-term note, asset management, long-term financial advisory and credibility service.

ICBC is the first financial institution in the country to open investment banking service within the commercial banking framework. In 2002, ICBC entered the domestic investment banking market and was the first bank among the peers to set up the Investment Banking Department. In less than a decade ICBC has built an investment service network covering the country and a professional team made up of more than a thousand financial planners. Besides, an Investment Banking Research Center has been set up in the Head Office with the first team of investment banking analysts in China. Every year, the Center independently publishes more than 1,000 research products providing strong support to the strategic decisions, customer services and project running related to investment banking.

Through years of practices, ICBC has established a development model customized to the needs of the customers and in line with China's regulatory framework, financial market conditions, business constraints inside and outside ICBC. A complete service line has been in place made up of 10+ investment products under 4 large categories of advisory/consultancy, restructuring/M&A, asset transfer/securitization and direct finance. ICBC accumulates rich experience after concluding a batch of large projects. Examples: in restructuring/M&A, ICBC has concluded numerous projects: "Baosteel Group", "Changyu Group", "Triangle Group", "Hengtong Chemical", "Dingtian Technology". Among them, "Acquisition of Bayi Iron & Steel by Baosteel Group" was included in the "2006 Top 10 Strategic M&A Events" compiled by Contemporary Manager (a domestic financial publication). "Equity transfer of Changyu" project was one of China Mergers and Acquisitions Association's "2005 Top 10 M&A in China". "Acquisition of CSG, Guangzhou Iron & Steel by Baosteel Group" was one of the "2008 Top 10 Restructuring/M&A" named by Securities Times, an authoritative media in China. In syndicated loan, ICBC has arranged many influential syndication projects in the global emerging market: namely, the USD 750 million syndicated loan for "Hynix Group", the USD 2.6 billion syndicated loan for "CNOOC and Shell"'s petrochemical project in South China Sea, the HKD 14 billion international syndication (debt restructuring) for "GDH Limited", the USD 2.7 billion international syndication (project finance) for "Shanghai SECCO", and the USD 4.4 billion international syndication (project finance) for "Nanhai Petrochemical". ICBC is holding the leading position in the domestic syndicated loan market. In underwriting of corporate debt instruments, ICBC, being the main underwriter, has successfully underwrote numerous issues of short-term bonds and mid-term notes by a number of companies: Ministry of Railways, China Netcom (Group) Corporation, China Petrochemical Corporation, Taiyuan Iron & Steel (Group) Corporation, China National Cereals, Oils and Foodstuffs Corporation. Besides, ICBC provides comprehensive financial advisory services to Yunnan Province Government, Shanxi Province Government, Kunming Municipal Government, to support the growth of regional economy. The Bank embraced innovation to develop new investment banking products such as equity private placement, direct investment and offer tailored equity finance and debt finance solutions to companies. ICBC joined with many international and domestic intermediary organizations to complete Ningbo non-performing asset securitization, the first such project by a commercial bank in China. As a result, ICBC drew rich experience in this field. Apart from the delivery of above services through projects, ICBC also offers long-term financial advisory and credibility services, which are investment banking services designed for all the corporate clients to get latest information.

ICBC reorganized its investment banking business in Hong Kong. ICBC International, its wholly-owned investment banking arm, was opened to business in May 2009. ICBC International provides a wide spectrum of full-licensed investment banking services including issuance and underwriting of stock, IPO sponsor, mergers and acquisitions, debt financing, corporate restructuring, securities brokerage, direct investment and fund management. Within a short period ICBC International has successfully participated in Brazilian Petrobras's new shares offering (world's largest equity financing project) and numerous super-scale capital market financing projects -– AIA IPO, General Motors IPO, Brazil Vale's HDR offering. In investment banking, ICBC is competing on the same ground with the top global peers, showing its competitive strength of investment banking services to serve top-tier customers in the global capital market. In August 2009, ICBC International entered partnership agreement with Taiwan SinoPac Securities, opening a new chapter for financial institutions from two sides of the Strait to serve the capital market. ICBC International, acting as the capacity of SinoPac's financial consultant, underwrote the Taiwan depositary receipts of USD 120 million issued by the Yangzijiang Shipbuilding (Holdings) Ltd and participated in the listing, debut of ICBC International in the Taiwan capital market.