China Development Bank

China Development Bank
Government-owned
Industry Finance
Founded 1994
Headquarters Beijing, People's Republic of China
Key people
 Hu Huaibang, Chairman
Products Banking
Increase RMB 10.303 trillion[1] (2015)
Number of employees
 3,500 personnel[1]
Website www.cdb.com.cn

The China Development Bank (CDB) (simplified Chinese: 国家开发银行; traditional Chinese: 國家開發銀行; pinyin: Guójiā Kāifā Yínháng) is a financial institution in the People's Republic of China (PRC) led by a cabinet minister level Governor, under the direct jurisdiction of the State Council. As one of three policy banks of the PRC, it is primarily responsible for raising funding for large infrastructure projects, including most of the funding for the Three Gorges Dam and Shanghai Pudong International Airport. Established by the Policy Banks Law of 1994, the bank is described as the engine that powers the national government’s economic development policies.[2][3]

Debts issued by CDB owned by local banks are treated as risk free assets under the proposed People's Republic of China capital adequacy rules i.e. same treatment as PRC government bonds. The bank is the second-biggest bond issuer in China after the Ministry of Finance in 2009, accounting for about a quarter of the country’s yuan bonds, and the biggest foreign-currency lender.[3]

History

The China Development Bank Tower in Shanghai.

The China Development Bank was established in March 1994 to provide development oriented finance for government projects of national priority. It is under the direct jurisdiction of the State Council or the People's Central Government. At present, it has 35 branches and 1 representative offices across the country. The bank provides financing for national projects such as infrastructure, basic industries, energy and transportation.[2]

The main objective as a state financial institution is to support the macroeconomic policies of the central government and to support national economic development and strategic structural changes in the economy.[2]

In the last decade alone, China Development Bank has issued 1.6 trillion yuan in loans to more than 4000 projects involving infrastructure, communications, transportation and basic industries. The investments are spread out along the Yellow River and both to the south and north of the Yangtze River. Increasingly, China Development Bank is focusing on developing the western and northwest provinces in China. This could help reduce the growing economic disparity in the western provinces and revitalize the old industrial bases of northeast China.[2]

Since 1998, the bank successfully reduced bad debts and returned to profits under Governor Chen Yuan. Chen was formerly the executive deputy governor of the PRC's central bank, The People's Bank of China. International financial standards and best practices were also introduced into the bank.

The bank also plays a major development role in alleviating infrastructure or energy bottlenecks in the Chinese economy. In 2003, CDB had loan arrangements for or evaluated and underwrote a total of 460 national debt projects and issued 246.8 billion yuan of loans. This accounted for 41% of its total investment. CDB loans to "bottleneck" investments that the government prioritises amounted to 91% of the total. It also issued accumulatively 357.5 billion yuan of loans to western areas and 174.2 billion yuan to old industrial bases in Northeast China. All these loans have substantially increased the economic growth and structural readjustments of the Chinese economy.[2]

At the end of 2004, the bank's total credit assets amounted to RMB 1378.6 billion, with current principal and interest recovery ratio of 99.77%, the indicator having maintained world-class performance for 20 consecutive quarters. The bank's non-performing loan ratio stood at 1.21%, down a year-on-year 0.13 percentage points. The coverage ratio of its risk reserves against non-performing loans hit 285%, and; its capital adequacy ratio reached 10.51%. During 2004, the bank made a profit of about US $2 billion.[2]

In year 2005 and 2006, China Development Bank successfully issued two pilot ABS products in domestic China market. Together with another ABS products issued by China Construction Bank, they have set the cornerstone for a promising debt capital & structured finance market.

At the end of 2010, CDB had US$687.8 billion in loans, more than twice as much as the World Bank.[3]

Organizational structure

The Governor of the bank reports to the Board of Supervisors which is accountable to the central government. There are four vice governors and two assistant governors.[4] CDB has about 3500 employees at the end of 2004, about 1000 of them work at the Beijing Headquarters and the rest are spread out in 35 mainland branches (including a representative office in Tibet) and a branch in Hong Kong. The bank does not take private savings, and hence does not have thousands of local branches like other major banks in China do.

Specialized departments

  • Policy Research
  • Business Development
  • Financial Research and Development Center
  • Credit Risk Management
  • Credit Administration
  • Investment Banking
  • International Finance
  • Large Corporate Lending
  • Project Appraisal (3)

General departments

  • Treasury
  • Supervision
  • Personnel
  • Auditing
  • Education and Training
  • Operating Center
  • General Logistics
  • Retired Staff
  • Comprehensive Planning
  • Accounting and Finance
  • Legal

Subsidiaries

Management

Stuart Gulliver, Executive Director of HSBC signs a "Memorandum of Understanding" with Zheng Zhijie, Vice Governor of China Development Bank, 10 January 2011.
  • Chairman Hu Huaibang,[5] born September 1955. Graduated with a Major in Studies of Money and Banking from Shaanxi Institute of Finance and Economics.
  • Vice Chairman Zheng Zhijie, born June 1958. Graduated with a Major in Infrastructure Financing from Liaoning Institute of Finance and Economics (now Dongbei University of Finance and Economics).
  • Chairman of Supervisory Board Yao Zhongmin, born May 1952. Graduated with a Major in Infrastructure Financing from Liaoning Institute of Finance and Economics (now Dongbei University of Finance and Economics).
  • Vice Governor Li Jiping, born September 1955. Graduated with a Major in Infrastructure Financing from Liaoning Institute of Finance and Economics (now Dongbei University of Finance and Economics).
  • Vice Governor Wang Yongsheng, born January 1958. Graduated with a Major in Investment Economics from Zhongnan university of Economics(now Zhongnan University of Economics and Law).
  • Vice Governor Yuan li, born 1962. Graduated with a Doctorate in Finance from Peking University.
  • Chief Compliance Officer Zhou Qingyu.
  • Assistant Governor Zhao Xiaoyu.
  • Assistant Governor Zhang Xuguang.

Deputy Governor

References

  1. 1 2 China Development Bank
  2. 1 2 3 4 5 6 China Development Bank Archived 2013-01-01 at Archive.is
  3. 1 2 3 Michael Forsythe, Henry Sanderson (June 2011). "Financing China Costs Poised to Rise With CDB Losing Sovereign-Debt Status". Bloomberg Market Magazine.
  4. ↑ China Development Bank
  5. ↑ China Development Bank Management Team (Chinese)
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