China

Everbright Bank may face big capital shortfall in the next three years without the IPO.

Lending to unprofitable government companies and projects had saddled China’s banking with 50% non-performing loan ratio.

Rivals ICBC reported to conduct up to $6.63bln rights issue while BoC seeks approval from regulator.

Renminbi new incremental loans amounted to $675.43bln in 1H 2010 prompted banks to recruit more staff.

Lender achieved 23% micro-credit growth to $12.2bln from $9.93bln to help 15mln farmers.

CCB-led consortium granted $959.62mln loan to AsiaAlum in a much needed financing to weather the crisis.

To spend 80% of proceeds of bond market entry to invest in Chinese banks' financing initiatives.

The bank takes the opportunity on China government's drive to boost growth in country's centre and Western regions.

The acquisition of six Bank of East Asia branches is part of ICBC's global expansion plan.

Providing banking and other financial services to the poor has always presented particular challenges. By definition, people with little or no money lack all but the most basic financial resources and economic influence. Their exclusion from the financial system means they have no credit history and no basis for participating in modern financial transactions. Poverty means they have little if any collateral to underpin lending. In large areas of the world, poor people also live in remote rural regions without access to the infrastructure of modern commerce and communications. This inability to benefit from financial services plays a large part in preventing the poor from making even modest improvements in their lives, and helps to trap them in poverty. More than 1 billion of the world’s population subsist on less than US$1a day. Finance for the poor The microfinance movement challenges the view that poor people are also poor credit risks, and that they cannot benefit from financial services. The origins of microfinance go back to at least the 1700’s. Since then the principle has grown with a number of organisations specialising in this including ACCION, SEWA Bank and Grameen Bank to name a few. The China context Despite rapid and continuous economic growth over the last 25 years, China is still home to tens of millions of the world’s poorest people. Many of these live in impoverished rural areas with few prospects of economic improvement aside from migration to the rapidly industrialising cities. Large-scale displacement of the rural poor is creating massive social disruption and further deepening income inequalities and the rural-urban divide. The Chinese government has been attempting to tackle this complex set of problems by promoting economic development in rural areas, the creation of small and medium-sized enterprises and the provision of a financial services infrastructure to support these objectives. Microfinance is beginning to play an important role. Potential and challenges Over the last decade, the People’s Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC) have encouraged the creation of rural credit cooperatives and village banks. More recently, trials have been taking place to establish dedicated Micro-Credit Companies (MCCs). To begin with, the Chinese government was very cautious, granting only 20 licences initially. ACCION, a not-for-profit organisation which has been active in microfinance for over 40 years, originally in South America, was invited to apply for one of the pilot MCC licences by the provincial government of Inner Mongolia. In December 2009, the company made history by becoming the first wholly foreign-owned organisation to receive an MCC licence in Inner Mongolia, making its first loans shortly afterwards.

Lender seeks 1.1-to-10 rights issue as analysts fear fund raising could put pressure on weak market.

A narrower price range or $0.37-$0.39 per share for the Shanghai offering is likely amidst weaker demand among investors in the mainland.

Lender targets $11bln from 630mln shares in Shanghai and 15.7bln shares in Hong Kong.

Lender still needs $2.34bln to achieve $4.84bln target for combined Shanghai and Hong Kong rights issue.

Parent Huijin's announcement precedes CCB's shareholder meeting tacking to push through with the $11bln fundraising plan.

MoU enabled lenders to work in wholesale and retail banking operations starting in Hong Kong.