Most innovative bank 2019
China International Capital Corp
Although the Chinese ABS market is still relatively young compared with those in more developed markets, domestic banks and securities houses have innovated relentlessly. From structuring supply-chain asset-backed securitization to securitizing a parking-lot’s future income, the market has an insatiable appetite for new asset types.
With such fierce competition, simply making use of a new asset class is admirable but not enough to call a firm the most innovative. CICC, however, has ventured out into new asset types as well as making substantial improvements with the existing ones.
As an example of its ability to discover new asset types, the firm acted as the joint lead on the first shelf ABN backed by leases taken out by small and micro-enterprises from Ping An International Financial Leasing, which has a long history of working with such firms.
In recent years, Chinese small and micro-enterprises have found it increasingly hard to seek funding for themselves. While the large state-owned commercial banks have received funding from the government to lend to small and micro-enterprises, they lack a pool of good-quality small and micro-enterprise clients from which to choose. Therefore, the deal matched the need from cash-thirsty small enterprises with large banks’ funding.
But CICC’s innovation effort does not stop at jumping on new asset types. In May, CICC acted as the joint lead underwriter of Bank of Hangzhou’s debut RMBS, an asset class dominated by large bank originators such as the China Construction Bank and Bank of China.
The Rmb3.16 billion ($450 million) debut under the series name Hangying was only the beginning. The second issuance in the series, Hangying 2019-2, surpassed the first one in size, becoming the largest RMBS issued by a city-level commercial bank.
More impressively, CICC managed to introduce international investors to Bank of Hangzhou’s RMBS thanks to its vast investor coverage, both at home and overseas. For a deal without an international rating and a market with relatively poor secondary liquidity, it was quite an achievement. Both deals have real impact on the Chinese securitization market and both have helped unlikely originators to issue ABS deals, opening another funding channel for them.