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  Home Page > Corporate Banking >Financial market >Corporate Risk Management >Business Profile
Business Profile
 

I. Introduction
Corporate risk management is a service that assists customers to protect value for their FX funds and future cash income and lock down transaction cost. Different types of financial instruments and combinations, especially financial derivatives and combinations are used to address exchange rate risk, interest rate risk, within the level of risks that the customers can tolerate for the given condition.

II. Main Product Lines
ICBC's risk management services are mainly divided into 10+ products under two major categories:

The above two product lines are ICBC standard products offered to customers, who have the choice of either one instrument or combinations for the purpose of meeting own requirements on risk and return, financial and business management.

ICBC can also provide tailored solutions if the above products fall short of your expectation.

III. Target Clients
Companies with good credibility, fully understand and have the need to hedge against the risk of currency fluctuations, exchange rate risk to help protect the company's future and can bear the hedging cost.

Remittance services are for companies facing the risk of exchange-rate volatility due to different currencies used in receipts and payments. These can be: 1. Companies bidding for overseas engineering contracts; 2. Companies directly investing in overseas on cross-border merger and acquisition, international property transfer, set up of manufacturing plants in overseas or investment for acquiring mining resources; 3. Import/export firms engaged in goods trade, service trade, technology trade involving FX receivables or FX payables.

Interest rate services are for companies who receive international loans via commercial banks in China and are exposed to exchange rate risk on the capital. These can be companies who have received international commercial loans (including bond issued overseas), buyer's credit and loans from overseas governments, or companies having FX loans with floating interest rate.

IV. Features and Advantages
In 2010, ICBC has been named "Excellent Spot Market Maker", "Excellent Market Maker in Derivatives", "Excellent Market Maker in Automatic Price", "Excellent Member in Derivatives Trading". In terms of corporate risk management services, ICBC has the following advantages:

(I) Rich product offering, many trading counterparties, better quotes.
(II) Solid financial strength, good creditability, offering sufficient line of credit to customers when compared to foreign banks.
(III) A professional team of market analysts, dealing specialists and super-strong capabilities in product innovation.
(IV) Cutting-edge dealing system, valuation/pricing system and quantitative analysis in the country. 

V. Application Conditions
(I) Credit rating of grade A (inclusive) or above;
(II) A true background on the need;
(III) Qualified and authorized to engage in derivative trading;
(IV) Understand the risks involved in derivative trading and willing to bear the potential loss;
(V) No bad credibility record in the bank, no serious bad record;
(VI) Line of credit granted by ICBC for derivative trading;
(VII) Primary deposit A/C or general deposit A/C opened in ICBC.
Relaxed rules on the credit rating and line of credit are applied to customers who can produce full margin amount or low-risk guarantee.

VI. Operation Guidelines
(I) Supply information to ICBC on your company's assets and liabilities, risk aversion requirement. ICBC will follow up and design a risk management proposal to meet the requirements.
(II) Follow the administrative rules of China Banking Regulatory Commission and sign the ICBC Agreement on Risk Management Services with ICBC, fill in Customer Evaluation Form to test your company's risk tolerance and assess if the services are suitable.
(III) Read carefully the Customer Confirmation Letter on ICBC Financial Derivatives Services for Corporate Clients, understand the trading terms and conditions, the potential risks involved in derivative trading, then sign the confirmation letter.
(IV) Work with ICBC on the due diligence, establish measures for credit risk management. If there is a necessity to use credit line for derivative trading, supply documentation as stipulated by the ICBC rules on granting credit. If you can produce full margin amount or other low-risk guarantee, help with ICBC's investigation to check if your guarantee is legal, full-valued and effective.
(V) Submit an official mandate to ICBC. Once internal approval is completed in ICBC, ICBC will issue a confirmation letter to the customer.
(VI) During the product duration, perform delivery obligation as stated in the agreement, sign to acknowledge the receipt of "corporate hedging services - market value assessment report" supplied by ICBC regularly, and work with ICBC on the subsequent risk management work.

VII. Service Channels
Customer manager or product manager of branches.

Note: Information herein is for reference only. Refer to the announcements and regulations of local outlets for further details. Industrial and Commercial Bank of China Limited reserves the final right of interpretation.


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