Our Businesses
China - Credit Guarantee explained
Chinese banks are now amongst the largest in the world having successfully grown with the size and importance of the Chinese economy.
Chinese banks are gradually turning their focus from dealing with State Owned Enterprises to lending to Small/Medium Sized Enterprises and individuals.
Lending institutions (which are primarily commercial banks) may require certain borrowers to obtain a credit guarantee from a Credit Guarantee Company before funds are advanced to the borrower.
A Credit Guarantee Company facilitates a loan between borrowers and banks by guaranteeing the repayment of the loan taken out by borrowers to the respective bank. Guarantees are only provided once suitable assets are lodged with the Credit Guarantee Company for the life of the loan. This enables borrowers to obtain funding from banks because of the guarantee security provided by the Credit Guarantee Company.
The credit guarantee industry in China is developing rapidly. By the end of 2009, Credit Guarantee Companies in China provided a total guarantee amount of RMB2.6 trillion to over 1 million enterprises.
According to forecasts, it is anticipated that the number of enterprises seeking guarantees from Credit Guarantee Companies will rise from 887,000 in 2008 to approximately 2.7 million in 2015. Although the forecast encompasses the various types of enterprises who are guaranteed by Credit Guarantee Companies in China, SMEs have always been, and are likely to remain, the main guarantee recipients of Credit Guarantee Companies.
As a Credit Guarantee Company, Fujian Zhong Hong acts an intermediary guarantor between such borrowers and lending institutions. It has positioned itself to focus on the following rapidly growing sectors:
- Individual property mortgage credit guarantees;
- short term and long term credit guarantee loans to SMEs;
- hire purchase vehicle credit guarantees; and
- project completion credit guarantees (construction and infrastructure).
In terms of future geographic expansion in China, the Board also intends to expand the Credit Guarantee Business in Xiamen (also in the Fujian Province) and, subject to regulatory approvals and licences, in the city of Wuxi in the nearby province of Jiangsu, and the Jilin Province where Dato Tan is retained as an economic adviser.
Currently, Fujian Zhong Hong utilises the strength of its Partner Banks' lending capacity and combines this with its ability to guarantee borrowers' repayments.
Partner Banks
The majority of Fujian Zhong Hong's customers under the Credit Guarantee Business will be referred to Fujian Zhong Hong by the Partner Banks. Fujian Zhong Hong currently has agreements with the following banks:
China Construction Bank
China Construction Bank (CCB) is listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange. At the end of 2009, the market capitalisation of CCB reached approximately US$201.4 billion. This effectively ranks CCB as the bank with the second largest market capitalisation among the listed banks in the world. CCB has approximately 13,629 branch outlets in China.
China Merchants Bank
China Merchants Bank (CMB) is headquartered in Shenzhen and mainly focuses on the Chinese domestic market. It is listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange. At the end of 2009, the bank had 52 branches and 685 sub-branches in 65 cities in China.
Evergrowing Bank
Evergrowing Bank (EB) operates as a national commercial bank in China. The bank has over 2,300 employees and a network of 81 branches across China, including branch offices in Beijing, Shanghai, and Shenzhen. At the end of 2009, EB's total assets reached RMB213.76 billion, and recorded a net profit of RMB1.19 billion.
Bank Of China
Bank of China (BOC) core business includes commercial banking, including corporate banking, personal banking and financial markets services. It has over RMB 6,951.68 billion in assets, making it part of the Fortune Global 500 for the past 17 years. It is the no.2 lender in China overall, the no.1 lender to non-institutions, and the no.1 foreign exchange lender. In terms of tier one capital, the Bank was ranked 11th among the world's top 1,000 banks by The Banker magazine in 2009.
Fujian Haixia Bank
Fujian Haixia Bank (FJHX) has 1,500 employees and a network of 35 branches across operates 3 prefecture-level cities – Zhangzhou, Longan and Ningde in the Fujian province, China. At the end of 2009, FJHX’s total assets reached RMB41.5 billion, and reported a net profit of RMB670 million.
Xiamen International Bank
Xiamen International Bank (XIB) was established in August 1985 as the first joint venture bank in China with capital of RMB 1.069 billion. XIB is based in Xiamen, Fujian Province, which also operates subsidiaries including Xiamen International Investment Limited (XIIL) in Hong Kong and Luso International Banking Limited (LIB) which runs 11 branches in Macau. In Mainland China, XIB operates branches and multiple sub-branches in cities including Beijing, Shanghai, Fuzhou, Zhuhai, Xiamen, and a representative office in Quanzhou.
China Minsheng Banking Corp., Ltd.
China Minsheng Bank (CMB), founded on January 12, 1996 in Beijing, is the first bank in China to be owned mostly by non-government enterprises. CMB has over two hundred banking outlets throughout China and relationships with more than seven hundred banks overseas. The bank was publicly listed on the Hong Kong Stock Exchange in 2009.
Ping An Bank
Ping An Bank (PAB) is a joint-stock commercial bank with its headquarters in Shenzhen. It primarily operates in Shenzhen, Shanghai and Fuzhou. As a subsidiary of Ping An Insurance (Group) Company of China, Ltd., the bank is one of the three main pillars of Ping An Group: insurance, banking and asset management. By the end of June 30, 2008, total audited assets of Ping An Bank stood at RMB131.409 billion with reported profit for the first half of 2008 at RMB795 million.
China CITIC Bank
China CITIC Bank (CITIC Bank) is China’s seventh-largest lender in terms of total assets. The company established in February 1987, is a nationally comprehensive and internationally oriented commercial bank. By end of October 2005, its network comprises 418 branches countrywide, and includes established correspondent relationships with 990 banks and their branches in 70 countries around the world. CITIC Bank is a wholly owned subsidiary of China International Trust and Investment Corporation (CITIC), with assets of RMB 576 billion (USD 71 billion).
