Bank of China
Bank of China is one of the big four state-owned commercial banks of the People's Republic of China – the other three are Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China. Bank of China was founded in 1912 to replace the Government Bank of Imperial China, and is the oldest bank in China. From its establishment until 1942, it issued banknotes on behalf of the Government of the Republic of China along with the "Big Four" banks of the period: the Central Bank of China, Farmers Bank of China and Bank of Communications. Although it initially functioned as the Chinese central bank, in 1928 the Central Bank of China replaced it in that role. Subsequently, BOC became a purely commercial bank.
Shipbuilder out to minimise currency risks
The mainland's biggest privately controlled shipbuilder, China Rongsheng Heavy Industries, will tap international banks, especially those based in Hong Kong, for foreign currency financing.
China Rongsheng president Chen Qiang said this was intended to reduce the foreign exchange risk between the greenback and the yuan.
The company signed its first foreign syndicated loan deal in August when Credit Agricole Corporate and Investment Bank agreed to provide a US$220 million transferable term loan guaranteed by the Export-Import Bank of China. Shipbuilding contracts are typically denominated in US dollars, while about 70 per cent of the shipbuilder's production costs are in yuan. The company made a 23.9 million yuan (HK$29.2 million) foreign exchange gain last year against a 37.6 million yuan foreign exchange loss in 2009.
'We have started co-operation with foreign banks through the agreement with Credit Agricole,' Chen said. 'We have to build up relationships with other banks, mostly in Hong Kong.' The French bank, Chen said, was chosen because it 'acted quickly when we talked with them'.
China Rongsheng has lines of credit with about 10 mainland banks for about 200 billion yuan, including a 35 billion yuan credit line agreed with China Development Bank in September and a 28 billion yuan credit line it got from Agricultural Bank of China in August.
The shipyard is about to deliver the first of the 12 400,000 deadweight tonne (dwt) giant ore carriers to Vale, the Brazilian commodities group.
'We plan to deliver the first VLOC at the end of this month,' Chen said. 'The second and third VLOCs have been launched and we will deliver them soon to the shipowner. Two others will be launched in the coming months. After delivery of the first vessel, we will deliver the others faster than the original plan.' The final ship would be delivered by the end of next year.
The shipbuilder also christened the first of 28 76,000 dwt Panamax dry cargo bulk carriers last month for Minsheng Financial Leasing, the mainland's biggest ship leasing company and an offshoot of China Minsheng Banking Corporation. Several of the other Minsheng ships are nearing completion, while 18 of the vessels have been leased to Fujian Guohang Ocean Shipping (Group).
Chen would not be drawn on the shipbuilder's further financing requirements but said about 3 billion yuan would be spent this year developing dry dock facilities at its shipyard at Rugao in Jiangsu province. The company is creating an offshore engineering centre to focus on fabricating higher-value ships including floating production and oil storage units - giant ships which are used to produce and store oil from offshore oilfields.
The shipbuilder is also investing in building construction equipment at plants in Anhui province.
The global shipbuilding industry is facing mixed prospects as overcapacity in the sector coupled with global financial woes has led to fewer new orders this year from shipowners despite price cuts. China Rongsheng has not escaped the downturn and is far from meeting its target of US$2.5 billion worth of new shipbuilding contracts this year. It had secured new contracts worth about US$1.4 billion for 31 ships, totalling more than 3.5 million dwt, as of September 30, giving it a global market share of 9 per cent in tonnage terms.