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Re-loan Financing of Foreign Government Loan

I. Introduction
ICBC can provide re-loan business of pure foreign government loan, mixed foreign government loan and international financial institutions loan, etc. The first type of re-loan is provided all by the foreign government and the second type of re-loan is a loan combined of foreign government loan and import credit.

II. Business varieties
Foreign government re-loan mainly including the re-loan of pure foreign government loan, mixed foreign government loan

III. Business features
The foreign government re-loan is featured by low interest rate and long term. The interest rate is no more than 3% usually, even some governments also provide interest-free loan. The term varies from 10 to 40 years in different countries. However, the foreign government loan is subject to some limit, such as with uses for purchase of the equipment produced by the lending country, approval by the governments of the lending and borrowing sides and the proportion of purchase of the equipment and technology of the third country should be no more than 10% to 30% of the commercial contractual amount. Nevertheless, some countries as Kuwaiti, Germany and North Europe investment banks conduct purchase by means of international bidding purchase without limit of countries.

IV. Prospective clients
It takes long time to approve the re-loan project of foreign government loan. Therefore, it is not suitable for the urgent funds needs. It is suggested that the projects on which the purchase is wished not to limited by the countries use the re-loan of international financial institutions or the loan provided by Germany and Kuwaiti, etc.

V. Operation process
1. Clients propose application in the local development and reform committee and the financial department. Please specify ICBC is the re-loan bank when applying for the project from financial department.
2. After approval for the project by local development and reform committee and the financial department, ICBC will carry out review and evaluation according to the notice of the financial department.
3. ICBC signs Foreign Exchange Re-loan Contract with clients.
4. Sign loan agreement with foreign banks or related government agencies and borrow the funds.
5. Execute the project.

VI. Notices
1. The industries obtaining foreign government loan: generally speaking, most projects obtaining foreign government loan are environmental protection, municipal infrastructure construction and other projects. Different countries have different regulations on it, please obtain the related information from local development and reform committee and the financial department.
2. Categories of re-loan projects: there are three categories of the re-loan projects classified by financial department. The first category is those projects that the financial departments and bureaus of the provinces, autonomous regions, municipalities and separately planed cities (provincial-level financial departments) takes the repayment liability for the borrower. The second category refers to those loans that the project units, as the borrower, undertake the repayment responsibilities. The provincial-level financial departments provides repayment guarantee. The third category refers to those that the project units, as the borrower, undertake the repayment responsibilities but the provincial-level financial departments shall neither act as the borrower nor providing the repayment guarantee. According to the experience of the bank, most environmental protection and municipal infrastructure construction, etc can successfully apply for the first two categories of projects. When clients apply for the project form financial department, they can specify the project category applied.
3. The approval procedures of the foreign government re-loan: the loan must be approved by the head office of ICBC in principle. Since 2003, the approval power for the above first two categories of projects (except the second category for which the central enterprises provide guarantee) is distributed to the provincial-level banks


What are the competitive advantages of ICBC?
(1) ICBC can relaon the foreign government loan provided by overwhelmingly most of the countries in the world.

(2) ICBC has been keeping good relationship with the foreign organizations providing foreign government loan and signed general agreement of foreign government loan, greatly simplifying the operation procedures.
(3) The powerful RMB funds strength of ICBC can provide clients with complete set of funds needed by their projects.
(4) ICBC can provide clients with swap arrangement aiming at avoiding foreign exchange risk of the domestic project units.
(5) For mixed foreign government loan, ICBC can fully take the double advantages of foreign government loan and buyer credit to provide clients with overall services.

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