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Interbank Refinancing

I. Description
Interbank refinancing refers to the financing business conducted between ICBC and other domestic financial institution customers based on cross-border trade settlement where one party (entrusted party) accepts the request of the other party (entrusting party) to make payment to corporate customers and the entrusting repays the principal, interest and related cost of the payment on the agreed date of repayment.
The interbank refinancing business is divided into two categories according to the entrustment relationship. In the first category, other domestic financial institutions serve as the entrusting parties and designate ICBC (entrusted party) as the payment bank. In the second category, ICBC serve as the entrusting parties and designate other domestic financial institutions (entrusted party) as the payment bank.

II. Target Customers
Commercial banks or other financial institutions that have foreign exchange business operation qualifications, are legally incorporated in China and have corporate customers with cross-border trade settlement financing needs.

III. Functional Features
1. The Interbank refinancing service needs to be based on real trade background, and no Interbank refinancing service with no trade background can be handled for the entrusting party.
2. The term of interbank refinancing business is limited to one year and the business will not be renewed after the expiration date.
3. ICBC directly transfers the refinancing fund to the account of beneficiaries with the purpose specified in the trade contract, rather than transferring the fund to the entrusted party for payment.
4. ICBC will follow current management rules and conduct the business accordingly in cases where ICBC serves as the entrusted party in the interbank refinancing business. The business where ICBC will serve as the entrusting party shall be reported to the Head Office for approval.

IV. ICBC Advantages
1. ICBC has strong home and foreign currency capital strength and an intensive capital operating system, and provides more competitive quotation than peers.
2. ICBC has experienced home and foreign currency trading teams and owns strong market competitiveness.

V. Price
The interbank refinancing service transaction price includes the interbank refinancing interest rate and the interbank refinancing service fee rate. ICBC will determine the transaction price jointly with interbank customers according to the internal fund transfer price, external interest rate pricing standard and the List of Service Price of ICBC by comprehensively considering various factors such as market condition, capital supply and demand, customer’s credit as well as ICBC’s capital cost and liquidity. The interest accrual basis for interbank refinancing business is determined by both parties according to the common market practice and the interest accrual period is the actual days of refinancing. In principal, the interest shall be paid on a monthly or quarterly basis or paid along with the principle in a lump sum upon maturity.

VI. Service Channels and Hours
There is no national unified trading network for interbank refinancing. ICBC and interbank customers have to sign written contracts to specify specific transaction elements, rights, and obligations.
Trading time: business hours from Monday to Friday (excluding statutory holidays).

VII. Operation Guide
i. The operation guide when ICBC serves as the entrusted bank:
1. The interbank customers apply to ICBC for the interbank refinancing service and signs the Master Agreement on Interbank Refinancing Service of Financial Institutions with ICBC.
2. After the price of specific business are determined by ICBC and the customer after negotiation and both parties agree on the quotation results, ICBC will send the Quotation for Interbank Refinancing Business the customer and ask the entrusting party to send the refinancing authorization message according to the transaction elements listed in ICBC’s quotation.
3. ICBC signs the Confirmation for Interbank Refinancing with the entrusting party and transfers the funds to the account of beneficiary designated by the entrusting party for the purposes agreed in the trade contract.
4. On the expiry date, the entrusting bank repays the principal and interest and other expenses to ICBC. If the entrusting party returns the refinancing principal and interest to ICBC later than the agreed maturity date of refinancing, ICBC will impose a penalty interest on the entrusting party according to the agreed penalty rate.
ii. The specific business where ICBC serves as the entrusting bank shall be conducted after the approval is obtained.

VIII. Risk Prompt
The interbank refinancing business is subject to various risks including policy risk, liquidity risk, operational risk and exchange rate risk. The level of interest rate is affected by many factors such as macroeconomic policies and changes in the operation of the money market. Customers should fully recognize the risks that this business may involve and well manage the liquidity.

Note: The information given on this page is for reference only. See the announcements and rules of local outlets for details.

Global Market