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AwardsChina Green Finance Awards

Best green Chinese bank in overseas markets 2017

Agricultural Bank of China

After embracing green finance with great enthusiasm a few years ago, Agricultural Bank of China, a 65-year-old state-owned bank in China, has emerged as a big green-credit provider in the domestic market. What is equally impressive is that ABC has also become a leader among Chinese banks to tap the global financial market to support its green lending at home and to establish cross-border green investment funds with international financial institutions.

In October 2015, ABC issued its first green bonds in London and raised about $1 billion. The dual currency bonds – a batch of Rmb600 million in yuan-denominated bonds and $900 million in dollar-denominated bonds – were listed on the London Stock Exchange and were several times oversubscribed thanks to their attractive coupon rates.

It was the first time a Chinese bank had placed green bonds in London. After issuing the bonds, ABC was highly efficient in allocating the raised capital. By the end of September, it had funnelled all the proceeds into 14 renewable energy and energy efficiency projects in China.

In November 2015, ABC signed a memorandum of understanding with Crédit Agricole’s asset management arm to set up a green-investment fund. The two parties plan to engage Chinese and French energy companies to contribute capital to the fund. Under the MOU, the fund will initially finance renewable energy development projects in China and France. In the second stage, it will also provide funding for energy efficiency and renewable energy projects in other countries. Once established, the fund will be the first cross-border green-investment fund structured by a Chinese bank and an international financial institution.

In 2016, ABC and Crédit Agricole’s asset management firm made steady progress towards launching the fund. They completed the drafting of a business plan and reached a consensus on where to incorporate a company to manage the fund and on the ownership structure of the new company.