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Underwriting of Asset-backed Securities

I. Description
Asset-backed securities mean a structured financing activity in the territory of the PRC, by which banking financial institutions, as sponsors, entrust credit assets to trustee institutions, which then issue beneficiary securities to institutional investors in the form of asset-backed securities, and pay the return on asset-backed securities with cash generated from such property.

II. Target Customers
The product is applicable to commercial banks, policy banks, trust investment companies, financial companies, urban credit cooperatives, and rural credit cooperatives incorporated in the territory of the PRC according to law, as well as other financial institutions managed by the CBRC according to law.
As the sponsor of credit asset-backed securitization, banking financial institutions transfer credit assets by setting up special purpose trusts (SPT), but shall meet the following conditions:
1. Have a solid credit standing and operating results, without any major violation of laws or regulations in the last three years;
2. Have good corporate governance and risk management systems and internal controls;
3. Have rational target positioning and clear strategic plan for running credit asset-backed securitization business, which align with its overall business target and development strategy;
4. Put in place adequate criteria and procedures for selecting and appointing SPT trustee institutions;
5. Have the professional personnel, business processing system, accounting system, management information system and risk management and internal control regulations required to run credit asset-backed securitization business;
6. Have no record of irregularities in credit asset-backed securitization business in the last three years; and
7. Other prudential requirements prescribed by the CBRC.

III. Function
The product can relieve financial institutions of risky assets, boost the capital adequacy ratio of banks; address the mismatch of liquidity, maturity and interest rate between assets and liabilities, strengthen management of assets and liabilities; revitalize existing assets and enhance asset turnover ratio.

IV. Features and Advantages
1. Strong underwriting strength: ICBC is one of the Grade-A underwriters for T-bonds issued by the Ministry of Finance, tier-1 trader in open market operations of the PBOC; was the first domestic commercial bank that obtained the qualification for underwriting corporate debt financing instruments; and has been rated as outstanding underwriter and outstanding trader for many times by the Ministry of Finance and the PBOC.
2. Abundant experience in underwriting: ICBC has a professional underwriting service team with abundant experience in bond underwriting, and has established a sound and effective internal operating mechanism in terms of customer service, credit risk review & assessment, and underwriting trade execution.
3. Good communication and cooperation relations: ICBC has established and maintained good communication and coordination relations with regulatory authorities, and solid business cooperation relations with investors, and can hence effectively ensure the smooth issuance of products.

V. Price
The interest rate on the product varies with customer types, conditions of underlying assets and market conditions. So the product is priced with reference to market prices and in compliance with the guiding opinions of regulatory authorities on issue prices.

VI. Service Channels and Hours
Banking financial institutions may contact ICBC directly during business hours to apply for the product, based on their financing needs.

VII. Application Procedures
1. Project review: Customers shall first submit an application to us according to the requirements of regulatory authorities. Then we will conduct due diligence and credit risk reviews, and sign relevant agreements with the applicants.
2. Registration application: ICBC submits project registration application materials to the CBRC and PBOC for review and approval.
3. Product issuance: Upon approval of a project by regulatory authorities, ICBC will promptly arrange for bond issuance.

VIII. Typical Cases
Since 2013, ICBC, as lead underwriter, has completed the issuance of RMB10-billion credit asset-backed securities for the Bank of Communications, and RMB3-billion personal car mortgage-backed securities for SAIC-GMAC.

Note: The contents on this page are for reference only. The ultimate power of interpretation is under the Industrial and Commercial Bank of China Limited. For part of the contents, notice and specific regulations of local branches shall prevail.

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