Download Renminbi 2.65% Bonds due 2013 Denomination: Rmb 10,000

The bonds are not equivalent to a time deposit, are unsecured and are not guaranteed. This is an investment
product. You should read this offering circular before deciding whether to buy the bonds.
You are advised to exercise caution in relation to the offer described in this offering circular. If you are in any doubt
about this offering circular, you should obtain independent professional advice.
Offering Circular
(statutory financial institution organized under the laws of the People’s Republic of China)
Renminbi 2.65% Bonds due 2013
Denomination: Rmb 10,000
The Export-Import Bank of China, or China Eximbank, is offering its Renminbi 2.65% bonds due 2013. The bonds will
constitute direct, unconditional, unsecured and unsubordinated obligations of China Eximbank and rank equally with other unsecured
and unsubordinated public external indebtedness of China Eximbank. China Eximbank will pay interest on the bonds semi-annually
in arrear on June 2, and December 2, of each year, beginning on June 2, 2011. Payments of principal and interest in respect of the
bonds will be made without deduction or withholding for any present or future taxes imposed by taxing authorities in mainland China
unless such deduction or withholding is required by law, in which event, China Eximbank will pay such additional amounts as will
result in the payment to you, as investors in the bonds of the amounts which would otherwise have been receivable, had no such
deduction or withholding been required. There is no sinking fund for the bonds.
Pursuant to the Special Decree of the State Council of China dated March 19, 1994, or the Special Decree, the People’s Bank
of China, the PRC central bank, is authorized and obligated to provide short-term loans to China Eximbank in the event that China
Eximbank experiences any liquidity shortages. However, the obligation of the People’s Bank of China to make such loans to China
Eximbank does not constitute a guarantee of the bonds and is not enforceable against the People’s Bank of China or the PRC
government by, and does not confer any right under or in respect of the Special Decree upon, you as an investor in the bonds.
The Securities and Futures Commission has, pursuant to Section 105(1) of the Securities and Futures Ordinance (Cap. 571,
Laws of Hong Kong) authorized, subject to certain conditions, the issue of this offering circular. Such authorization by the Securities
and Futures Commission does not imply its endorsement or recommendation of the bonds. The Securities and Futures Commission
takes no responsibility as to the contents of this offering circular, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the
contents of this offering circular.
The bonds have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not
be offered, sold, pledged or transferred within the United States or to, or for the account or benefit of U.S. persons.
The bonds will not be listed on any stock exchange. The bonds will be issued in bearer form and represented by a global bond
held in the Central Moneymarkets Unit Services, or CMU, operated by the Hong Kong Monetary Authority, or HKMA. A
sub-custodian nominated by HKMA, as the CMU operator, is the legal holder of the bonds. Your placing bank through which you
subscribe for the bonds will arrange to hold the bonds for you in an account at CMU (either its own account or the account of its
direct or indirect custodian with CMU). China Eximbank will pay interest and principal on the bonds to CMU and you will have to
rely on your placing bank to ensure that payments on your bonds are credited to your account by your placing bank. Any notices China
Eximbank give after the issuance of the bonds will be given through CMU, and you will have to rely on your placing bank to ensure
that China Eximbank’s notices reach you. If China Eximbank defaults on the bonds, you will have to rely on your placing bank to
enforce your claims against China Eximbank. Please refer to the section entitled “How to Apply for the Bonds — How Do I Hold
My Bonds? What Must I Rely on My Placing Bank to Do for Me?” on page 17 of this offering circular for detailed explanations.
Joint Lead Managers and Bookrunners
Bank of China
(Hong Kong) Limited
HSBC
Standard Chartered Bank
(Hong Kong) Limited
Placing Banks
Bank of China (Hong Kong) Limited
Bank of Communications Co., Ltd.
Hong Kong Branch
The Bank of East Asia, Limited
China Construction Bank
(Asia) Corporation Limited
Chiyu Banking
Corporation Limited
Chong Hing Bank
Citibank (Hong Kong) Limited
CITIC Bank International Limited
Dah Sing Bank
DBS Bank (Hong Kong) Limited
Fubon Bank
Hang Seng Bank Limited
HSBC
Industrial and Commercial Bank of
China (Asia) Limited
Nanyang Commercial Bank,
Limited
Public Bank (Hong Kong) Limited
Shanghai Commercial Bank
Limited
Standard Chartered Bank
(Hong Kong) Limited
Wing Hang Bank, Limited
Wing Lung Bank Limited
November 5, 2010
IMPORTANT
You are warned that the market value of the bonds may fluctuate. You should therefore ensure that
you understand the nature of the bonds and carefully study the risk warnings set out in this offering
circular and, where necessary, seek independent professional advice, before you invest in the bonds.
The president, vice presidents, secretary of disciplinary committee and assistant presidents of
China Eximbank collectively and individually accept full responsibility for the accuracy of the
information contained in this offering circular. They confirm, having made all reasonable enquiries, that
to the best of their knowledge and belief this offering circular contains no untrue statement (including
a statement which is misleading in the form and context in which it is included and including a material
omission). They have made all reasonable enquires to ascertain such facts and to verify the accuracy
of such statements.
The bonds constitute general unsecured contractual obligations of China Eximbank. If you invest
in the bonds, you are relying upon China Eximbank’s creditworthiness.
China Eximbank’s offering circular is also available in Chinese from each placing bank listed on
page 15 of this offering circular. For the terms and conditions of the bonds, the English version will
prevail, and the Chinese version is only a translation for your reference only.
中國進出口銀行的發售通函的中文版本可於發售通函程第15頁所列的各配售銀行索取，但債
券的條款及條件須以英文文本為準，中文譯本僅供閣下參考。
You should rely only on the information contained in this offering circular in making your investment
decision. Neither China Eximbank nor any joint lead manager, joint bookrunner, placing bank, market
maker, fiscal agent and paying agent participating in this offering has authorized anyone to provide you
with any other information. Neither the delivery of this offering circular, nor any offering, sale or delivery
made in connection with the issue of the bonds should at any time or in any circumstances imply that the
information contained in this offering circular is correct as at any time subsequent to the date of this
offering circular or constitute a representation that there has been no change or development reasonably
likely to involve a material adverse change in the affairs of China Eximbank since such date. No
representation or warranty, express or implied, is made by any joint lead manager, joint bookrunner,
placing bank, market maker, fiscal agent and paying agent participating in this offering or any of their
affiliates or advisers as to the accuracy or completeness of the information contained in this offering
circular, and nothing contained in this offering circular is, or should be, relied upon as a promise or
representation by any joint lead manager, joint bookrunner, placing bank, market maker, fiscal agent and
paying agent participating in this offering or their affiliates or advisers.
No offer or solicitation with respect to the bonds may be made in any jurisdiction or under any
circumstances where such offer or solicitation is unlawful or not properly authorized. The distribution of
this offering circular and the offering of the bonds in certain jurisdictions may be restricted by law. Persons
into whose possession this document comes are required by China Eximbank and the joint lead managers
and bookrunners and placing banks to inform themselves about, and to observe, any such restrictions.
Unless otherwise indicated, all references in this offering circular to “China” or the “PRC” are to the
People’s Republic of China; all references to “Hong Kong SAR” are to the Hong Kong Special
Administrative Region of China; all statistical information and references in this offering circular relating
to China or mainland China excludes information with respect to Hong Kong SAR, the Macau Special
Administrative Region and Taiwan; all references in this offering circular to “non-resident enterprise” are
to any enterprise not resident in mainland China that (1) has not established any offices or premises in
mainland China or (2) has established such offices and premises in mainland China but there is no real
connection between the capital gains and the offices or premises so established by such enterprise; all
references in this offering circular to “non-resident individual” are to any individual who does not have
any domicile and does not reside in mainland China, or any individual who does not have any domicile
in mainland China and has resided in mainland China for less than one year.
— i —
Unless otherwise indicated, all references in this offering circular to “Renminbi” or “Rmb” are to the
lawful currency of China; all references to “Hong Kong dollar” or “HK$” are to the lawful currency of
Hong Kong SAR; all references to “U.S. dollar” or “US$” are to the lawful currency of the United States
of America; all references to “Japanese yen” or “JP¥” are to the lawful currency of Japan; all references
to “Euro” or “ =C ” are to the euro, the currency introduced by the European Economic and Monetary Union,
pursuant to the Treaty Establishing the European Community, as amended, in the European Union.
Solely for your convenience, China Eximbank has translated amounts between different currencies
for the purpose of consistent presentation in this offering circular. These translations follow the rates of
exchange China Eximbank uses in preparing its accounts as described in Note III(5) to its consolidated
financial statements beginning on page F-1. China Eximbank is not making any representation that
Renminbi or any other currency referred to in this offering circular could have been or can be converted
into any other currency, at any particular rate or at all.
China Eximbank’s consolidated financial statements beginning on page F-1 of this offering circular
were prepared in accordance with the accounting principles and practices which may differ in material
respects from generally accepted accounting principles in other jurisdictions. Significant differences
between China Eximbank’s current accounting policies and the International Financial Reporting
Standards are described in the section entitled “Significant Differences between PRC Accounting
Standards and International Financial Reporting Standards” in this offering circular.
China Eximbank has made forward-looking statements in this offering circular. The words
“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “forecast,” “seek,” “will,”
“would” and similar expressions, as they relate to China Eximbank, are intended to identify a number of
these forward-looking statements. Forward-looking statements are statements that are not historical facts.
These statements are based on China Eximbank’s current plans, estimates, assumptions and projections and
involve known and unknown developments and factors that may cause China Eximbank’s financial
condition and results of operations or business environment to be materially different from that expressed
or implied by these forward-looking statements. Therefore, you should not place undue reliance on them.
Actual results, performance or achievements may differ materially from the information contained in the
forward-looking statements as a result of a number of factors, including changes in interest rates, exchange
rates, PRC economic, political and social conditions, government fiscal, monetary and other policies as
well as prospects of China’s continued economic reform. Forward-looking statements speak only as of the
date they are made, and China Eximbank undertakes no obligation to update any of them in light of new
information or future events.
Any discrepancies in any table between totals and sums of amounts listed in the table are due to
rounding.
— ii —
TABLE OF CONTENTS
KEY FACTS STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
HOW TO APPLY FOR THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
APPLICATION CHANNELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
MORE INFORMATION ABOUT THE BONDS AND THIS OFFERING CIRCULAR . . . . . .
22
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
DESCRIPTION OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM . . . . . . . .
62
SIGNIFICANT DIFFERENCES BETWEEN PRC ACCOUNTING STANDARDS AND
INTERNATIONAL FINANCIAL REPORTING STANDARDS . . . . . . . . . . . . . . . . . . . . . . .
64
TAXATION OF BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
FINANCIAL ACCOUNTING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
TERMS AND CONDITIONS OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
— iii —
KEY FACTS STATEMENT
The following provides you with key information about the bonds and may not contain all the information
that may be important to you. You should read and understand the entire offering circular before making
your investment decision.
Quick Facts about the Bonds
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Export-Import Bank of China.
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Renminbi 2.65% Bonds, due 2013.
Interest Rate . . . . . . . . . . . . . . . . . . . . . . .
2.65% per year.
Subscription Period . . . . . . . . . . . . . . . . . .
9:00 a.m., November 9, 2010 to 2:00 p.m., November
26, 2010.
Subscription Price . . . . . . . . . . . . . . . . . . .
100% of the principal amount of bonds (i.e., Rmb
10,000 per bond).
Handling Fee . . . . . . . . . . . . . . . . . . . . . . .
0.15% of the principal amount of bonds you
purchase, unless waived or reduced by your placing
bank.
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . .
December 2, 2010. China Eximbank may decide to
close the offer early, or allow more time, without
prior notice. China Eximbank also reserves the right
to cancel the offer of the bonds at any time on or
before the scheduled issue date.
Maturity Date . . . . . . . . . . . . . . . . . . . . . .
China Eximbank will repay 100% of the principal
amount of the bonds on the interest payment date
falling on or nearest to December 2, 2013.
Interest Payment Dates . . . . . . . . . . . . . . .
June 2 and December 2 of each year, beginning June
2, 2011 until the maturity date.
Repayment Amount . . . . . . . . . . . . . . . . . .
100% of the principal amount, if you hold the bonds
until maturity.
Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equal with China Eximbank’s other general,
unsecured and unsubordinated public external
indebtedness, with equal liquidation preference with
all its general, unsecured and unsubordinated
indebtedness, but after creditors of China
Eximbank’s secured debt or China Eximbank’s
creditors whose claims are preferred by operation of
law.
Total Issue Amount . . . . . . . . . . . . . . . . . .
China Eximbank will decide the total principal
amount of bonds to be issued in light of investor
demand and its funding requirements. The aggregate
principal amount (which includes the offering of the
bonds to retail investors and the offering of the bonds
and other debt securities to institutional and other
investors) will not exceed Rmb 5,000,000,000.
— 1 —
Denomination, Minimum Purchase Amount
and Minimum Transfer Amount . . . . . . . . .
No Guarantee or Collateral Arrangement .
The denomination of the bonds is Rmb 10,000 per
bond and you may buy or sell bonds of Rmb 10,000
or integral multiples of Rmb 10,000 in nominal
principal amount. You should be aware that, as an
individual investor, the daily maximum amount that
you may exchange Renminbi is Rmb 20,000.
The bonds are not secured on any of China
Eximbank’s assets or any collateral.
The bonds are not guaranteed. You will be relying on
the creditworthiness of China Eximbank alone when
you invest in the bonds.
Listing and Liquidity . . . . . . . . . . . . . . . . .
The bonds will not be listed. There may only be a
limited trading market for the bonds or no market at
all. You should be prepared to hold the bonds to
maturity.
Governing Law . . . . . . . . . . . . . . . . . . . . .
The bonds, the fiscal agency agreement and other
related agreements will be governed by the laws of
Hong Kong SAR, except that all matters governing
authorization and execution of the bonds, the fiscal
agency agreement and other related agreements by
China Eximbank will be governed by the PRC laws.
What Are the Key Risks of Investing in the Bonds?
•
NOT equivalent to a time deposit; NOT protected under the Hong Kong Deposit Protection
Scheme NOR guaranteed by the Hong Kong SAR Government’s Exchange Fund —
Investment involves risks. This is an investment product and is not equivalent to a time deposit.
The bonds are not protected under the Hong Kong Deposit Protection Scheme nor guaranteed by
the Hong Kong SAR Government’s Exchange Fund. The investment decision is yours but you
should not invest in the bonds unless the placing bank that sells the bonds to you has explained
to you that the bonds are suitable for you according to your financial situation, investment
experience and investment objectives.
•
Limited payout and upside — The payout under the bonds is limited to the nominal amount of
the bonds together with all interest payments payable during the term of the bonds; and the
maximum return on the bonds is limited to the interest payments of 2.65% per year.
•
Conversion between Renminbi and foreign currencies, including Hong Kong dollar, subject
to PRC regulatory restrictions — The PRC government regulates conversion between Renminbi
and foreign currencies both in Hong Kong SAR and mainland China, which as a result may affect
the liquidity of the bonds.
•
Exchange rate risk and interest rate risk — The bonds are denominated in Renminbi and carry
a fixed interest rate. The Hong Kong dollar value of your investment will go down if the Renminbi
depreciates against the Hong Kong dollar. The value of your investment will also decrease if
Renminbi interest rates go up during the term of the bonds.
•
No liquid secondary market — The bonds are designed to be held to maturity and have no liquid
secondary market. If you try to sell your bonds, you may not be able to find a buyer, or the sale
price could be much lower than the amount you invested.
— 2 —
•
Credit risks and your maximum loss upon default — When you buy the bonds, you will be
relying on China Eximbank’s creditworthiness alone. The bonds are unsecured and are not
guaranteed by anyone. If China Eximbank becomes insolvent or defaults on any of its
obligations under the bonds, you can only claim as an unsecured creditor against China Eximbank.
In the worst case scenario, you could lose all of your investment.
•
Not covered by Investor Compensation Fund — The bonds are not listed on any stock exchange
and are not covered by the Investor Compensation Fund.
•
Difficulty in enforcing judgments against China Eximbank — China Eximbank is a statutory
financial institution organized under the laws of China and substantially all of its assets and
operations are located in mainland China. There is uncertainty regarding the recognition and
enforcement in mainland China of judgments given by Hong Kong SAR courts.
English Version of Terms and Conditions Prevails over Chinese Translation
If there is any inconsistency between the Chinese translation of the terms and conditions of the
bonds and the English version, the English version will prevail over the Chinese translation. If you do
not understand the English version, you should obtain independent professional advice.
You Do Not Have Direct Contractual Rights to Enforce the Bonds
The bonds will be represented by a global bond and no individual bearer certificates will be issued
to you with respect to your holding of the bonds. To assert your rights as an investor in the bonds, you
will have to rely on your placing bank to take action on your behalf. If your placing bank fails to take
action in accordance with your instructions or it becomes insolvent or defaults on its obligations, you
will need to take action against your placing bank in accordance with the terms of arrangement between
you and your placing bank.
Who Are the Bonds for?
The bonds are designed for investors who:
•
wish to invest in Renminbi-denominated bonds providing periodic fixed interest payments
and principal repayment in Renminbi at maturity;
•
are looking for a buy-to-hold product and do not need to sell their bonds before maturity for
liquidity needs; and
•
understand that when they invest in the bonds, they will be relying on China Eximbank’s
creditworthiness alone.
How Can You Buy the Bonds? What Are the Fees and Charges?
You can buy the bonds from any of the placing banks listed on page 15 of this offering circular.
Some of the placing banks may allow you to give application instructions for the bonds through internet
or by telephone. Please refer to the section entitled “Application Channels” in this offering circular for
details of such facilities and a warning of some of the inherent risks. The placing bank with which you
place your order will ask you to fill in its order form and may ask you to make a series of confirmations
and acknowledgements such as those set out beginning on page 15 of this offering circular. Your placing
bank is required to ensure that you understand and are able to give these confirmations and
acknowledgements.
When you place your order, you are required to pay to the placing bank the subscription price of
the bonds you order (Rmb 10,000 per bond) plus a handling fee, unless such handling fee is waived or
reduced by your placing bank. The handling fee is the fee that the placing bank charges for handling
your order, calculated as a percentage (0.15%) of the principal amount of the bonds you buy. It is in
addition to the subscription price you pay to China Eximbank. Each placing bank will receive a
commission of 0.18% of the total principal amount of the bonds allotted to each successful applicant
who applied through such placing bank from China Eximbank based on the principal amount of bonds
it sold.
— 3 —
Do You Need a Renminbi Bank Account?
You need to have a Renminbi bank account with a placing bank when you subscribe for the bonds.
You may also need to accumulate sufficient Renminbi to pay the subscription price and the handling fee
(if any). If you are not allotted any bonds or your application is successful only in part, the whole or
an appropriate portion of the subscription price will be returned to you by crediting the sum into your
Renminbi bank account. If your application is successful, you will need to maintain a Renminbi bank
account to receive the principal and interest (payable periodically) under the bonds, which will be paid
in Renminbi by China Eximbank and be credited to your Renminbi bank account by your placing bank.
When you open a Renminbi bank account or settle Renminbi payments, you may be subject to
restrictions which are imposed by People’s Bank of China and are currently applicable to Renminbi
transactions in Hong Kong SAR. Details of these restrictions are set out beginning on page 16 of this
offering circular.
You may be subject to further restrictions in dealings in Renminbi in Hong Kong SAR as may be
imposed by government authorities of Hong Kong SAR or China from time to time.
How Will the Bonds Be Held?
The bonds will be represented by a single global bond which China Eximbank will issue in a
principal amount equal to the total principal amount of the bonds. The global bond will be deposited
for safekeeping with a sub-custodian for CMU, which is a clearing system operated by HKMA.
As China Eximbank does not intend to issue individual bearer certificates for the bonds, you must
arrange for your placing bank to hold them in a securities or investment account. If you do not have
a securities or investment account, you will have to open one with your placing bank before you can
buy the bonds.
What if the Bonds Are Over-subscribed?
China Eximbank intends to allocate at least one bond to every investor who applies. The
remaining bonds will then be allocated to investors approximately in proportion to the number of bonds
each investor validly applied for. If the bonds are over-subscribed to the extent that China Eximbank
cannot even allocate one bond to each applicant, China Eximbank will choose by ballot.
What if You Change Your Mind? Is There a Cooling-off Period?
You may not revoke your application once you have submitted the order form to your placing
bank. There is no cooling-off period.
Is There any Market Making Arrangement?
China Eximbank has agreed with each placing bank that such placing bank will make a market for
the bonds in over-the-counter transactions under a market making agreement. You can contact the
placing bank that holds your bonds in your securities or investment account at any time after the issue
date to ask for a price at which you can sell your bonds. The market making arrangements do not assure
that you will have access to a firm offer price for your bonds in a principal amount which you wish to
sell. These banks have agreed with China Eximbank to quote prices, but they may in the future be
unable to quote a price or may decide to discontinue this service. Prices obtained by different banks may
not be the same.
— 4 —
What Are the Continuing Disclosure Obligations?
During the life of the bonds, China Eximbank will give notice to the investors in the bonds of any
changes in the financial condition of, or other circumstances relating to, China Eximbank that could
reasonably be expected to materially and adversely affect China Eximbank’s ability to meet its
obligations under the bonds.
Any notices China Eximbank gives after the bonds are issued will be given to the placing banks
through the fiscal agent. You will have to rely on your placing bank to forward the notices to you.
What Are the Registration and Other Formalities after the Bonds Are Issued?
China Eximbank will apply for registration of the bond proceeds with the local branch office of
the State Administration of Foreign Exchange within 10 working days of the issue date of the bonds
pursuant to the Interim Measures for the Administration of the Issuance of Renminbi Bonds in Hong
Kong SAR by Domestic Financial Institutions, or the Interim Measures. In addition, China Eximbank
will apply for ratification of each principal or interest payment with the local branch office of the State
Administration of Foreign Exchange five working days prior to each principal or interest payment date
pursuant to the Interim Measures.
For More Information
This key facts statement does not contain all the information you need to make an informed
investment decision. You must read the entire offering circular before deciding whether to invest in the
bonds.
You can read copies of certain documents in connection with the issuance of the bonds by going
to the offices of the fiscal agent set out below. Its offices are open only during normal business hours
and not on Saturdays, Sundays or public holidays.
The fiscal agent and principal paying agent:
Bank of China (Hong Kong) Limited
25/F, Bank of China Centre
Olympian City
11 Hoi Fai Road
West Kowloon
Hong Kong
Phone: (852) 3197 5122
Email: [email protected]
Website: www.bochk.com
— 5 —
SUMMARY
This summary may not contain all the information that may be important to you. You should read the
entire offering circular before deciding to invest in the bonds.
China Eximbank
China Eximbank was established on April 26, 1994 pursuant to the Special Decree of the State
Council dated March 19, 1994 as a policy-oriented statutory financial institution under the direct authority
and full ownership of the State Council, the highest institution of the PRC government administration. It
is the only government export credit agency in mainland China. Pursuant to the Special Decree, China
Eximbank operates on an autonomous basis and conducts its activities under the direct leadership of the
State Council. China Eximbank is subject to the supervision and direction of the People’s Bank of China,
the China Banking Regulatory Commission, the Ministry of Finance, the National Development and
Reform Commission and the Ministry of Commerce with respect to its business activities.
The primary purpose of China Eximbank is to provide policy-oriented financial support for the export
and import of capital goods and related services in accordance with the PRC government’s industrial and
foreign trade policies. China Eximbank aims to supplement commercial financing by absorbing some of
the repayment risks that the commercial and private sectors are unable to absorb and by providing
financing to PRC exporters and foreign importers when commercial and private financing is not available.
China Eximbank may also engage in other lines of business approved by the PRC government. As an
instrumentality serving the policy objectives of the PRC government, China Eximbank does not seek to
maximize profits, nor is it an aid agency. Rather, it seeks to achieve moderate profitability while preserving
capital as mandated in the Special Decree. The Ministry of Finance also provides support to China
Eximbank in the form of fiscal subsidies, which are allocated each year in the annual budget of the PRC
central government, to compensate China Eximbank for losses incurred in its policy-oriented banking
operations. Each year, the Ministry of Finance provides such subsidies in accordance with the relevant
PRC central government policy to reflect the total policy-oriented credit operations of China Eximbank as
well as its cost of funds.
As one of China’s policy banks, China Eximbank receives financial support from the PRC
government. In addition to contributions to the capital of China Eximbank, the PRC government provides
direct and indirect financial support for the business activities of China Eximbank. According to the
Special Decree, sources of funds available to China Eximbank include: (a) capital contribution by the PRC
government, (b) fiscal subsidies from the Ministry of Finance, (c) issuance of Renminbi-denominated and
foreign currency-denominated debt securities in the domestic and international capital markets, (d)
short-term loans provided by the People’s Bank of China, and (e) borrowings from domestic and foreign
financial institutions. However, the financial support to China Eximbank from the PRC government does
not constitute a guarantee of the bonds, and is not enforceable against any PRC government entity by, and
does not confer any right upon, you as an investor in the bonds.
China Eximbank is also a designated on-lending agent for the PRC central government. China
Eximbank has on-lent to PRC end-users credits made available to the PRC central government by foreign
governments through financial institutions. The PRC government has established an on-lending support
fund which can be drawn on by China Eximbank to make payments to the foreign governmental lenders
on behalf of the PRC central government before full collection of payments from the PRC end-users.
China Eximbank acts as the only designated lending institution for the PRC central government in
connection with concessional loans to borrowers in developing countries selected by the PRC government.
China Eximbank is protected against any loss in principal with respect to its concessional loan operations
by a concessional loan reserve fund established by the PRC government for the exclusive use of China
Eximbank. As the lender of these concessional loans on behalf of the PRC government, China Eximbank
receives fiscal subsidies from the Ministry of Finance to compensate for any losses in interest receipts and
for administrative expenses on such concessional loans.
— 6 —
At present, China Eximbank has 16 operational branches, namely, the Beijing branch, the Shanghai
branch, the Shenzhen branch, the Nanjing branch, the Dalian branch, the Chengdu branch, the Qingdao
branch, the Zhejiang branch, the Hunan branch, the Chongqing branch, the Shaanxi branch, the Hubei
branch, the Heilongjiang branch, the Guangdong branch, the Yunnan branch and Ningbo branch. China
Eximbank also has one domestic representative office located in Fuzhou, and three overseas representative
offices, one based in Johannesburg, South Africa, servicing Southern and Eastern Africa, one based in
Paris, France, servicing Europe and North Africa and the third based in St. Petersburg, Russia, servicing
Russia and East European countries. These branches and offices, located near various project sites,
enhance China Eximbank’s ability to implement its credit management policy and to improve monitoring
of its credit projects. In addition, China Eximbank has maintained agency relationships with 1,099
branches of over 500 domestic and foreign banks in 152 countries and regions.
The following table presents summary historical consolidated financial information of China
Eximbank as of and for the years ended December 31, 2008 and 2009. Since this information is only a
summary, you should read the complete consolidated financial statements included under “Financial
Accounting Matters — Report of General Manager (Accounting Department)” beginning on page F-1 in
this offering circular. This summary does not include any information from the balance sheet of China
Eximbank’s on-lending operations with respect to central or provincial governmental on-lending borrowers
or on-lendings guaranteed by central or provincial governmental agencies, which is accounted for on a
stand-alone basis. Such on-lending balance sheet is not consolidated with the balance sheet of China
Eximbank. In accordance with the agency arrangements between China Eximbank and the Ministry of
Finance, China Eximbank is acting as an agent of the Ministry of Finance in administering these loans.
Although China Eximbank is required to front funds toward the payment of the principal, interest and
foreign banking charges on behalf of the Ministry of Finance in accordance with the loan agreements
between the Ministry of Finance and foreign lenders and related PRC regulations, the agency arrangements
expressly provide that China Eximbank has no liability to pay any principal, interest or foreign banking
charges with respect to the loans. In its capacity as such on-lending agent, China Eximbank has been fully
reimbursed by the Ministry of Finance with respect to all its fronted funds. See “Financial Accounting
Matters — Report of General Manager (Accounting Department) — Note VII. Balance Sheet of
On-lending Loans of Foreign Governments” beginning on page F-28 in this offering circular.
For the year ended
December 31,
2008
2009
(in thousands of Rmb)
Consolidated Income Statement Data:
Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Interest Income . . . . . . . . . . . . . . .
Interest Income . . . . . . . . . . . . . . . . . .
Interest Expense . . . . . . . . . . . . . . . . . .
Net Fee and Commission Income . . . . .
Fee and Commission Income. . . . . . . . .
Fee and Commission Expense . . . . . . . .
Investment Profits . . . . . . . . . . . . . . . .
Profits/(Losses) from Fair Value Change
Other Income/(Losses) . . . . . . . . . . . . .
Foreign Exchange Profits/(Losses) . . . .
Other Business Income . . . . . . . . . . . . .
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Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Tax and Affixation . . . . . . .
General and Administrative Expenses
Impairment Losses on Assets . . . . . .
Other Business Cost . . . . . . . . . . . . .
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— 7 —
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6,335,244.73
5,911,401.21
3,622,584.56
22,400,883.35
18,778,298.80
1,823,037.96
1,892,574.24
69,536.28
950,791.53
489,620.11
(550,789.43)
(560,511.88)
9,722.45
3,498,109.67
23,737,595.23
20,239,485.56
1,952,911.39
2,003,509.40
50,598.02
896,767.44
(329,010.49)
(107,376.79)
(180,828.98)
73,452.18
3,707,776.86
2,862,053.58
1,152,345.48
862,507.23
1,692,924.15
—
1,175,524.92
1,029,408.90
625,095.57
32,024.19
For the year ended
December 31,
2008
2009
(in thousands of Rmb)
Operating Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,627,467.87
3,049,347.63
Add: Non-Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Non-Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . .
211,175.27
12,712.97
447,264.98
10,309.91
Profits before income Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,825,930.17
3,486,302.70
Less: Income Tax Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
604,042.67
965,343.51
Net Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,221,887.50
2,520,959.19
Other Comprehensive Income/(Loss) . . . . . . . . . . . . . . . . . . . . .
(73,292.92)
82,630.26
Total Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,148,594.58
2,603,589.45
Attributable to Equity Holders of China Eximbank . . . . . . . . . . .
2,148,594.58
2,603,589.45
As of December 31,
2008
2009
(in thousands of Rmb)
Consolidated Balance Sheet Data:
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . .
Due from Central Bank . . . . . . . . . . . . . . . . . . . .
Interbank Lendings . . . . . . . . . . . . . . . . . . . . . . .
Lending to Banks and Other Financial Institutions .
Derivative Financial Assets . . . . . . . . . . . . . . . . .
Securities Purchased under Resale Agreements . . .
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . .
Accrued Interest . . . . . . . . . . . . . . . . . . . . . . . . .
Other Receivables . . . . . . . . . . . . . . . . . . . . . . . .
Loans and Advances . . . . . . . . . . . . . . . . . . . . . .
Available-for-Sale Financial Assets . . . . . . . . . . . .
Held-to-Maturity Investment . . . . . . . . . . . . . . . . .
Long-term Equity Investments . . . . . . . . . . . . . . .
Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in Progress . . . . . . . . . . . . . . . . . . .
Disposal of Fixed Assets . . . . . . . . . . . . . . . . . . .
Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term Deferred Expense . . . . . . . . . . . . . . . .
Capital for Debt Payment . . . . . . . . . . . . . . . . . . .
Deferred Income Tax Assets . . . . . . . . . . . . . . . . .
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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76,355.99
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1,489,349.12
. 100,856,695.35
. 16,958,602.51
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1,150,722.42
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1,387,100.00
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632,409.47
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2,586,356.33
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60,106.73
. 442,464,153.11
. 37,591,593.72
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32,110,014.83
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1,227,962.11
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971,272.11
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131,616.21
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32.36
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29,973.47
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76,950.99
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—
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1,758,363.08
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10,537.67
161,626.74
3,778,716.31
120,852,455.34
9,611,238.98
389,549.58
29,805,869.75
5,549,090.53
2,415,061.50
208,966.34
591,884,951.50
10,263,127.02
12,223,785.94
1,895,166.70
1,139,821.65
471,497.20
33.91
20,171.60
50,991.17
19,220.50
1,337,514.00
59,004.04
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641,570,167.58
792,137,860.30
— 8 —
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As of December 31,
2008
2009
(in thousands of Rmb)
Liabilities
Due to Other Banks and Financial Institutions .
Interbank Borrowings. . . . . . . . . . . . . . . . . . .
Derivative Financial Liabilities . . . . . . . . . . . .
Securities Sold under Repurchase Agreements .
Due to Customers . . . . . . . . . . . . . . . . . . . . .
Tax Payable. . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Payable . . . . . . . . . . . . . . . . . . . . . . .
Other Account Payable . . . . . . . . . . . . . . . . . .
Estimated Liabilities . . . . . . . . . . . . . . . . . . .
Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Income Tax Liabilities . . . . . . . . . . .
Other Liabilities . . . . . . . . . . . . . . . . . . . . . .
. 198,120,813.41
. 12,658,674.35
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852,393.58
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—
. 44,182,976.17
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858,193.76
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3,770,468.28
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345,685.29
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1,058,926.48
. 367,600,363.29
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287,680.61
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4,250,908.16
211,696,483.22
11,221,506.15
415,856.72
2,791,223.34
51,277,339.36
681,314.95
1,889,846.92
673,217.14
1,193,916.67
488,589,313.05
98,585.31
11,420,374.07
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,987,083.38
781,948,976.90
Equity
Paid-in Capital . . . . . . . . . . .
Capital Surplus and Reserves .
Earnings Surplus . . . . . . . . . .
General Risk Reserve. . . . . . .
Undistributed Profit/(Loss) . . .
Attributable to Equity Holders
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.............
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China Eximbank
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5,000,000.00
(71,247.18)
394,053.44
3,571,173.63
(1,310,895.69)
7,583,084.20
5,000,000.00
13,592.83
394,053.44
3,571,173.63
1,210,063.50
10,188,883.40
7,583,084.20
10,188,883.40
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641,570,167.58
792,137,860.30
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recent Credit Ratings
These credit ratings accorded to China Eximbank by rating agencies are not recommendations to
purchase, hold or sell the bonds or any securities since such ratings do not comment as to market price
or suitability for you. A rating may not remain in effect for any given period of time and may be suspended,
reduced or withdrawn entirely by the rating agency in the future if in its judgment circumstances so
warrant. If any such rating is so suspended, reduced or withdrawn, China Eximbank are under no
obligation to update this offering circular.
Moody’s Investors Service, Inc. has assigned an A1 senior unsecured debt rating to China Eximbank.
Fitch Ratings Inc. has assigned an A+ senior unsecured debt rating to China Eximbank. Standard & Poor’s
Ratings Group has assigned an A+ long-term foreign issuer credit rating to China Eximbank. You may find
China Eximbank’s latest credit ratings on its website: www.eximbank.gov.cn.
The bonds are not rated. Neither has China Eximbank solicited or otherwise induced any rating
agency to provide a rating, formal or informal, to the bonds offered by this offering circular.
— 9 —
Concurrent Offering
In addition to offering and selling the bonds to retail investors in Hong Kong SAR, China Eximbank
will also offer and sell the bonds and other debt securities to institutional or other investors, whether in
Hong Kong SAR or abroad, under arrangements not set forth in this offering circular. Offers of bonds to
institutional or other investors may be made on different terms, including a lower issue price, from those
available to retail investors as specified in this offering circular.
— 10 —
The Offering
This offering summary highlights information contained elsewhere in this offering circular. It is not
complete and does not contain all the information that you should consider before investing in the bonds.
You should read this entire offering circular carefully.
Issuer . . . . . . . . . . . . . . . . . . . . . . . .
The Export-Import Bank of China.
Principal Amount . . . . . . . . . . . . . . .
China Eximbank will decide the total principal amount of
bonds to be issued in light of investor demand and its funding
requirements. The aggregate principal amount (which
includes the offering of the bonds to retail investors and the
offering of the bonds and other debt securities to institutional
and other investors) will be up to Rmb 5,000,000,000.
Interest Rate . . . . . . . . . . . . . . . . . .
2.65% per year.
Subscription Period . . . . . . . . . . . . .
9:00 a.m., November 9, 2010 to 2:00 p.m., November 26,
2010.
Subscription Price . . . . . . . . . . . . . .
100% of the principal amount of bonds.
Handling Fee . . . . . . . . . . . . . . . . . .
0.15% of the principal amount of bonds you purchase, unless
waived or reduced by your placing bank. This is the fee you
pay the placing bank which handles your order. It is in
addition to the subscription price you pay to us.
Issue Date . . . . . . . . . . . . . . . . . . . .
December 2, 2010. China Eximbank may decide to close the
offer early, or allow more time, without prior notice. China
Eximbank also reserves the right to cancel the offer of the
bonds at any time on or before the scheduled issue date.
Maturity Date . . . . . . . . . . . . . . . . .
China Eximbank will repay 100% of the principal amount of
the bonds on the interest payment date falling on or nearest to
December 2, 2013.
Interest Payment Dates . . . . . . . . . . .
June 2 and December 2 of each year, beginning June 2, 2011
until the maturity date. If any of the interest payment dates is
not a business day in Hong Kong SAR or Beijing, China
Eximbank will make the interest payment on the next day that
is a business day, unless the next business day would fall into
the next calendar month in which event it will be brought
forward to the immediately preceding business day.
Redemption or Sinking Fund . . . . . .
None. China Eximbank may not redeem the bonds until their
maturity.
Form . . . . . . . . . . . . . . . . . . . . . . . .
Global bond in bearer form, representing the aggregate
principal amount of the bonds, deposited on the issue date of
the bonds with a sub-custodian of CMU.
Denomination and Minimum Purchase
and Transfer Amount . . . . . . . . . . . . .
The denomination of the bonds is Rmb 10,000 and you may
buy or sell bonds of Rmb 10,000 or integral multiples of Rmb
10,000 in nominal principal amount. You should be aware
that, as an individual investor, the daily maximum amount
that you may exchange Renminbi is Rmb 20,000.
— 11 —
Ranking . . . . . . . . . . . . . . . . . . . . .
Equal with China Eximbank’s other general, unsecured and
unsubordinated public external indebtedness, with equal
liquidation preference with all its general, unsecured and
unsubordinated indebtedness. The term “public external
indebtedness” includes its borrowings and guarantees for
money borrowed having an original maturity of more than
one year which may be quoted, listed or traded on any
securities market as securities outside mainland China. Such
public external indebtedness does not include amounts owed
to financial institutions in mainland China. As of December
31, 2009, the principal amount of China Eximbank’s public
external indebtedness outstanding was approximately US$2.6
billion. As of December 31, 2009, China Eximbank had
aggregate borrowings overseas with maturities of or over 365
days, including its public external indebtedness, of
approximately US$2.6 billion.
Listing . . . . . . . . . . . . . . . . . . . . . .
None.
Limitation on Other Indebtedness . . .
None.
No Credit Support . . . . . . . . . . . . . .
The bonds are not guaranteed by China. The PRC central
bank, the People’s Bank of China, is obligated under the
Special Decree to make short-term loans in the event China
Eximbank experiences any liquidity shortages. However, this
does not constitute a guarantee from the People’s Bank of
China or the PRC government, and you, as an investor in the
bonds, do not have any rights against the People’s Bank of
China or the PRC government in respect of this support
obligation.
Negative Pledge . . . . . . . . . . . . . . . .
China Eximbank will not secure any other public external
indebtedness unless it also secures the bonds on the same
terms.
Events of Default . . . . . . . . . . . . . . .
•
China Eximbank fails to pay any amount of principal or
interest in respect of the bonds and the continuance of
such failure for 30 days; or
•
China Eximbank defaults in the performance or
observance of any of its other obligations under the
bonds or the fiscal agency agreement and such default
remains unremedied for 60 days following receipt by
China Eximbank of written notice from investors in the
bonds with an aggregate principal amount of not less
than 10% of the outstanding bonds requiring it to
remedy such failure; or
— 12 —
•
China Eximbank defaults in the payment of principal or
interest in excess of US$25,000,000 (or its equivalent in
any other currency or currencies) payable (whether
upon maturity, acceleration or otherwise) in connection
with its public external indebtedness (other than that
represented by the bonds), and the failure of China
Eximbank to pay or validly reschedule (with the consent
of the holders of such public external indebtedness) the
payment of such public external indebtedness within 30
days of the date on which such payment has become due
(including any applicable days of grace); or
•
an order is issued or any other action is taken by
appropriate authorities of or in China for the dissolution
or merger or consolidation of China Eximbank (except
where China Eximbank is the continuing entity) or for
the transfer or assignment of the whole or a material
part of its assets (except, in either case, where all the
obligations of China Eximbank under the bonds then
outstanding are legally assumed by another agency
designated by the State Council; provided that (i) such
agency is a solvent financial institution organized and
existing under the laws of China, (ii) such agency is
controlled, directly or indirectly, by China, (iii) such
agency assumes in writing all the obligations of China
Eximbank under the bonds, and (iv) immediately after
giving effect to such transaction no event of default or
event or condition that, with the giving of notice or the
lapse of time or both, would become an event of default
has occurred and is continuing); or
•
the PRC government ceases to own at least 51% of
China Eximbank; or
•
unless the PRC central government fully guarantees or
otherwise assumes the indebtedness and all obligations
of China Eximbank evidenced by the bonds and under
the fiscal agency agreement, the People’s Bank of China
(or the successor central bank of China) ceases or fails
to provide the liquidity support stipulated in the Special
Decree as in effect as of the issue date of the bonds or
the Special Decree (i) is modified in a manner which
prejudices the rights of the investors in the bonds or (ii)
ceases to be valid or effective unless it is replaced by
such enactment or legislation which is not prejudicial to
the rights of the investors in the bonds.
Upon the occurrence and during the continuation of any event
of default, each investor in the bonds may declare the
principal of its bonds due and payable immediately by written
demand given to China Eximbank and the fiscal agent unless,
prior to the receipt of that demand by the fiscal agent, all
defaults have been cured.
— 13 —
Use of Proceeds . . . . . . . . . . . . . . . .
China Eximbank intends to use the net proceeds from the sale
of the bonds to fund Renminbi-denominated export credits
extended by China Eximbank and for general corporate
purposes.
Further Issuances . . . . . . . . . . . . . . .
China Eximbank may from time to time, without the consent
of the investors in the bonds, create and issue further bonds
having the same terms and conditions as the bonds in all
respects, except for the issue date, issue price and the first
payment of interest thereon. Additional bonds issued in this
manner will be consolidated with and will form a single series
with the bonds.
Fiscal Agent and Principal Paying
Agent . . . . . . . . . . . . . . . . . . . . . . . .
Notices . . . . . . . . . . . . . . . . . . . . . . .
Bank of China (Hong Kong) Limited.
So long as the bonds are represented by a global bond and the
global bond is held by or on behalf of CMU, notices required
to be given to the investors in the bonds may be delivered to
persons shown in the CMU instrument position report as
holding interests in the global bond.
So long as any of the bonds in the form of individual
definitive certificates remains outstanding, any holder of such
bonds or related coupons may deliver any notice to China
Eximbank relating to the bonds or coupons through the fiscal
agent. So long as the bonds are represented by a global bond
and the global bond is held by or on behalf of CMU, you as
an investor in the bonds must deliver your notice to China
Eximbank or the fiscal agent through the placing bank with
whom you maintain your beneficial ownership in the global
bond. You should inquire with your placing bank with respect
to the ways you may communicate with China Eximbank or
the fiscal agent.
Governing Law . . . . . . . . . . . . . . . . .
The bonds, the fiscal agency agreement and other related
agreements will be governed by the laws of Hong Kong SAR,
except that all matters governing authorization and execution
of the bonds, the fiscal agency agreement and other related
agreements by China Eximbank shall be governed by the PRC
laws.
— 14 —
HOW TO APPLY FOR THE BONDS
Where Can I Buy Bonds?
You can buy bonds from any of the placing banks listed below. Call a hotline to find out more or get
a list of branches where you can place your order for bonds offered by China Eximbank.
PLACING BANKS
Hotline
Number
Bank
Bank of China (Hong Kong) Limited . . . . . . . . . . . . . . . . .
Bank of Communications Co., Ltd. Hong Kong Branch . . . .
The Bank of East Asia, Limited . . . . . . . . . . . . . . . . . . . . .
China Construction Bank (Asia) Corporation Limited . . . . .
Chiyu Banking Corporation Limited . . . . . . . . . . . . . . . . .
Chong Hing Bank Limited . . . . . . . . . . . . . . . . . . . . . . . .
Citibank (Hong Kong) Limited . . . . . . . . . . . . . . . . . . . . .
CITIC Bank International Limited . . . . . . . . . . . . . . . . . . .
Dah Sing Bank, Limited . . . . . . . . . . . . . . . . . . . . . . . . . .
DBS Bank (Hong Kong) Limited . . . . . . . . . . . . . . . . . . .
Fubon Bank (Hong Kong) Limited . . . . . . . . . . . . . . . . . .
Hang Seng Bank Limited . . . . . . . . . . . . . . . . . . . . . . . . .
The Hongkong and Shanghai Banking Corporation Limited .
Industrial and Commercial Bank of China (Asia) Limited . .
Nanyang Commercial Bank, Limited . . . . . . . . . . . . . . . . .
Public Bank (Hong Kong) Limited . . . . . . . . . . . . . . . . . . .
Shanghai Commercial Bank Limited . . . . . . . . . . . . . . . . .
Standard Chartered Bank (Hong Kong) Limited . . . . . . . . .
Wing Hang Bank, Limited . . . . . . . . . . . . . . . . . . . . . . . . .
Wing Lung Bank Limited . . . . . . . . . . . . . . . . . . . . . . . . .
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2105-8900
2269-9699
2211-1311
2779-5533
2232-3633
3768-6888
2860-0258
2287-6788
2828-8001
2290-8888
2566-8181
2998-9898
2233-3000
2189-5588
2622-2633
2851-9803
2818-0282
2886-8868
3199-9182
2526-5555
You may find further information on application channels for the bonds in the section entitled
“Application Channels” in this offering circular.
Do I Need an Application Form?
You do not need an application form. China Eximbank will not issue an application form for the
bonds.
The placing bank with which you place your order will ask you to fill in its order form and to make
a series of confirmations and acknowledgements, including that you have read and understood this offering
circular.
Your placing bank should be able to explain to you how the bonds work and answer your questions.
What Confirmations Do I Have to Make?
When you apply to buy any bonds (whether in person, over the telephone or through the internet),
your placing bank will require you to confirm for its benefit and the benefit of China Eximbank that:
•
you agree to accept the bonds you have applied for or any lesser number allotted to you;
•
you authorize your placing bank to which you give your application instructions to credit any
bonds allotted to you to your investment account with it and you understand that no certificates
of title will be available for your bonds and your interest in your bonds is in book-entry form
only;
— 15 —
•
you agree that if you are not allotted any bonds or if your application is successful only in part,
the whole or an appropriate portion of the application price will be returned to you without
interest at your own risk;
•
you understand that the bonds will be held through CMU, which means that you will have to
rely on the placing bank selected by you to credit the account you hold with that placing bank
with payments credited to it through CMU, and to distribute notices to you which it receives
from China Eximbank through the fiscal agent;
•
you have read and understood this offering circular and have relied on no other information or
material relating to the bonds;
•
you have read and understood the sections entitled “Description of the Bonds” and “Terms and
Conditions of the Bonds” in this offering circular and the application procedures set out in this
offering circular and agree to be bound by them;
•
you understand and accept that China Eximbank accepts no responsibility for the provision of
bank services and custody services by the placing banks or for any consequences of, or arising
from your use of any bank account and investment account or custody services of any placing
bank (including any telephone or internet application facilities offered by such placing bank);
•
you agree that neither China Eximbank nor any placing banks, their respective directors,
officers, agents and nominees will be liable to you or any other person in any way for any loss
suffered as a result of the sale by any placing bank of your bonds in accordance with the terms
and conditions of the operation of your bank account/investment account with any such placing
banks; and
•
you confirm that you are not located within the United States, Canada or Japan and are not a
U.S. Person and are purchasing the bonds in an offshore transaction pursuant to Regulation S
under the United States Securities Act of 1933 and rules and regulation promulgated under such
Act. Terms used in this paragraph have the meanings given to them by Regulation S.
You will be required to confirm that you have read and understood these confirmations when you
instruct your placing bank to apply for bonds on your behalf. Ensure that you have read and understood
these confirmations and that you are comfortable with making the confirmations before you sign any
acknowledgments for your placing bank. If you have any questions on any of these confirmations, you
should ask your placing bank for clarification and your placing bank should be able to give you an
explanation regarding these confirmations (and if applicable, you should not proceed with a telephone or
internet application until your placing bank has provided you with the necessary clarification or
explanation).
What if the Bonds Are Over-subscribed?
China Eximbank intends to allocate at least one bond to everyone who applies. The remaining bonds
will then be allocated to investors approximately in proportion to the number of bonds each investor has
validly applied for. If the bonds are so over-subscribed that China Eximbank cannot even allocate one bond
to each applicant, China Eximbank will choose by ballot.
Are there any Restrictions on Renminbi Account or Settlement of Renminbi Payment?
You need to have a Renminbi account when you subscribe for the bonds. You may also need to
accumulate sufficient Renminbi to pay the subscription price. If you are not allotted any bonds or your
application is successful only in part, the whole or appropriate portion of the subscription price will be
returned to you by crediting into your Renminbi account. If your application is successful, you would need
to maintain a Renminbi account to receive the principal and interest (payable periodically) under the bonds
which will be paid in Renminbi by China Eximbank and be credited to your Renminbi account by your
placing bank.
When you try to open a Renminbi account or settle Renminbi payments, you may be subject to the
following restrictions:
•
for individuals, Renminbi accounts are only available to Hong Kong SAR residents with Hong
Kong SAR identity cards;
— 16 —
•
for individuals, the daily maximum exchange limit for Renminbi is Rmb 20,000;
•
for individuals, the daily maximum remittance amount to mainland China is Rmb 80,000 and
remittance service is only available for a Renminbi deposit accountholder who remits from his
or her Renminbi deposit account to mainland China; provided that the account name of the
account in mainland China is identical with that of the Renminbi account with the banks in
Hong Kong SAR;
•
although individual Renminbi accountholders can transfer their Renminbi funds from one bank
to another bank to facilitate subscription and/or purchase of bonds issued by mainland financial
institutions such as China Eximbank in Hong Kong SAR, such account transfer may be subject
to restrictions imposed by the account banks; and
•
an individual Renminbi accountholder can only issue a Renminbi cheque to the bank (i) to
which he or she places the order to subscribe for the bonds or (ii) with which he or she conducts
secondary market transactions in relation to the bonds.
In addition, your Renminbi account will be subject to the terms and conditions of the placing bank
with which the account is opened.
If you are a corporate entity, there are no general legal restrictions on the opening of a Renminbi bank
account with a Renminbi participant bank, the ability for you to exchange Renminbi with other currencies,
or the ability for you to effect transfers of Renminbi funds between different accounts in Hong Kong SAR.
Your bank will need to comply with the usual banking business rules including know-your-client and other
anti-money laundering requirements in handling these transactions for you.
The above-mentioned restrictions are not exhaustive as different banks could have different and/or
additional restrictions. There may be additional rules, regulations and restrictions under contemplation or
to be issued by the relevant Hong Kong SAR authorities that may be relevant to your investment in
Renminbi-denominated bonds. You should check with your placing bank for updates and details.
How Do I Hold My Bonds? What Must I Rely on My Placing Bank to Do for Me?
China Eximbank will issue the bonds in bearer form. China Eximbank does not intend to issue
individual certificates for its bonds and will instead issue one global bond to represent the bonds, so you
must arrange for your placing bank to hold any bonds you purchase in a securities or investment account.
If you do not have a securities or investment account already, you will have to open one before you can
buy any bonds. You should read the section entitled “Summary of Provisions Relating to the Bonds in
Global Form” for additional information.
You should note that your total return on an investment in the bonds will be affected by charges
levied by your placing bank.
You should discuss this with your placing bank and shop around if you wish. Placing banks charge
varying fees to open and maintain these securities or investment accounts and have different arrangements
for processing orders. You should familiarize yourself with the standard terms and conditions which your
placing bank will apply to your account. You should ask your placing bank to explain if you are not
familiar with these arrangements. You should note that your total return on an investment in the bonds will
be affected by charges levied by your placing bank.
The bonds will be held in CMU, which is a clearing system run by HKMA.The bonds will be
represented by a single global bond which China Eximbank will issue in a principal amount equal to the
total principal amount of the bonds. The global bond will be deposited for safekeeping with a
sub-custodian of CMU. When the bonds are represented by a global bond, the references in this offering
circular to you as an investor in the bonds essentially refer to you as a holder of a beneficial interest in
the global bond. You should read the section entitled “Summary of Provisions Relating to the Bonds in
Global Form” for additional information.
As disclosed in the “Description of the Bonds — Definitive Bonds,” if China Eximbank defaults on
its bonds, or if CMU closes down and China Eximbank fails to appoint a replacement clearing system, or
if China Eximbank decides in its discretion not to have the bonds represented by a global bond, China
Eximbank will issue individual bearer certificates for the bonds with coupons attached. China Eximbank
will not issue individual bearer certificates otherwise. Only under such circumstances, you as an investor
in the global bond will become a holder of the actual bonds in the form of individual certificates. The fiscal
— 17 —
agency agreement provides in detail for the arrangements which will apply in the unlikely event that
individual certificates have to be issued. If any of these events occurs, China Eximbank will give a notice
summarizing these arrangements. If China Eximbank is unable to deliver this notice to the CMU
participants, China Eximbank will publish the notice in one English language newspaper and one Chinese
language newspaper of general circulation in Hong Kong SAR.
Your placing bank will arrange to hold your bonds for you in an account at CMU, either through its
own account or the account of its direct or indirect custodian with CMU. China Eximbank will pay interest
and principal on the bonds to the bank accounts of the account holders notified to China Eximbank by
CMU as persons having an interest in the global bond in accordance with the rules and procedures of the
CMU. You will have to rely on your placing bank to ensure that payments on your bonds are credited to
your account by your placing bank. Once China Eximbank has made any payments in this way, investors
in the bonds, including you, will have no further rights against China Eximbank for that payment, even if
your placing bank fails to transmit to you your share of the payment or transmits it late. This is because,
so far as China Eximbank is concerned, China Eximbank has paid the “holder” of its global bond, which
is the CMU operator. China Eximbank has no control over, or knowledge of, the custody arrangements
through which you as an investor hold any of the bonds. Any notices China Eximbank gives after the bonds
are issued will be given through the fiscal agent: you will have to rely on your placing bank to ensure that
such notices reach you. Similarly, you will have to rely on your placing bank to forward any notices from
you to China Eximbank through the fiscal agent of China Eximbank.
China Eximbank does not accept any responsibility for the services provided to you by your placing
bank.
What Are the Arrangements with the Placing Banks? Is the Offer Underwritten?
China Eximbank has appointed the placing banks listed under “— Where Can I Buy Bonds?” to take
orders for the bonds. China Eximbank will pay them a commission of 0.18% of the principal amount of
bonds they sell.
In addition to offering and selling the bonds to retail investors in Hong Kong SAR, China Eximbank
will also offer and sell the bonds to institutional or other investors, whether in Hong Kong SAR or abroad,
under arrangements which are not set out in this offering circular. Offers of bonds to institutional or other
investors could be made at a lower issue price, or on other terms, than are available to retail investors who
buy the bonds through a placing bank specified in this offering circular.
There are no soft commission or rebate arrangements between China Eximbank and any of the
placing banks.
The bonds are sold to you by subscription directly from China Eximbank.
In relation to the offering of the bonds pursuant to this offering circular, Bank of China (Hong Kong)
Limited, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank (Hong
Kong) Limited have agreed to underwrite the bonds.
Bank of China (Hong Kong) Limited, The Hongkong and Shanghai Banking Corporation Limited and
Standard Chartered Bank (Hong Kong) Limited have agreed (together with any additional underwriter in
respect of the offering to institutional or other investors) to underwrite the bonds in a total principal
amount up to Rmb 5,000,000,000 (which includes the offering to retail investors and institutional or other
investors).
Administrative Functions Are Performed by Agents of China Eximbank
Administrative matters relating to the bonds are dealt with in the fiscal agency agreement, which
China Eximbank will enter into on or about November 26, 2010, with Bank of China (Hong Kong) Limited
as its fiscal agent, paying agent and calculation agent. Bank of China (Hong Kong) Limited in such
capacities is referred to as the agents. This fiscal agency agreement sets out the arrangements between
China Eximbank and its agents for:
•
making payments of principal and interest on the bonds;
•
giving notices to the investors in the bonds;
— 18 —
•
issuing individual certificates for bonds, in the unlikely event that China Eximbank ever needs
to do so;
•
organizing and running meetings of the investors in the bonds; and
•
keeping records and dealing with other administrative matters.
Each of the agents is an agent of China Eximbank. It owes no duties to you as investors in the bonds.
— 19 —
APPLICATION CHANNELS
You may decide to instruct your placing bank to make the application for the bonds in any of the
following ways:
•
In Person. You may go to any designated branch of your chosen placing bank (please telephone
the “Hotline Numbers” of the placing banks shown in the section entitled “How to Apply for
the Bonds” for a list of the designated branches for each placing bank) and give the instructions
in person to the placing bank to apply for the bonds on your behalf. If you need to open an
investment account with the placing bank with which you have your bank account at the time
of giving your application instructions, you must go to a branch of your chosen placing bank
to open an investment account before or at the same time as you give your application
instructions. You are urged to give your application instructions in good time before the closing
of the subscription period of the bonds to ensure the paperwork can be completed.
•
By Internet. You may make an on-line application if you already have both a bank account and
an investment account with a placing bank which offers such facilities and if you have made
the necessary arrangements to use the internet banking facilities provided by such placing bank.
By making an on-line application through a placing bank, you are required to comply with such
placing bank’s terms and conditions in respect of the internet banking facilities provided by
such placing bank.
The website of each placing bank which offers on-line application facilities for the bonds are
set out below:
Placing bank
Website address
Bank of China (Hong Kong) Limited . . . .
Chiyu Banking Corporation Limited . . . . .
Hang Seng Bank Limited . . . . . . . . . . . .
The Hongkong and Shanghai Banking
Corporation Limited . . . . . . . . . . . . . .
Industrial and Commercial Bank of China
(Asia) Limited . . . . . . . . . . . . . . . . . .
Nanyang Commercial Bank, Limited . . . .
http://www.bochk.com
http://www.chiyubank.com
http://www.hangseng.com/eipo/eng/welcome.html
http://www.hsbc.com.hk/ipo
http://www.icbcasia.com
http://www.ncb.com.hk
Warning:
Reference to any website in this offering circular is intended to assist you to access further
public information relating to the subject as indicated. You should, however, conduct your
own web searches to ensure that you are viewing the most up-to-date information and the
website that you are viewing is genuine. Except for the electronic version of this offering
circular, information appearing on such websites does not form a part of this offering
circular. Neither China Eximbank nor the Securities and Futures Commission accepts any
responsibility whatsoever that such other information, if available, is accurate and/or
up-to-date, and no responsibility is accepted in relation to any such information by any
person responsible for this offering circular. The offer of the bonds by China Eximbank
is made solely on the basis of the information contained in this offering circular and
prospective investors should exercise an appropriate degree of caution when assessing the
value of other information which may appear on such websites.
•
By Telephone. You may make a telephone application if you already have both a bank account
and an investment account with a placing bank which offers such facilities and if you have
made the necessary arrangements to use the telephone banking services provided by such
placing bank. By making a telephone application through a placing bank, you are required to
comply with such placing bank’s terms and conditions in respect of the telephone banking
services provided by such placing bank.
— 20 —
The phonebanking telephone number of each placing bank which offers telephone application
facilities for the bonds are set out below:
Placing bank
Telephone number
Bank of China (Hong
Kong) Limited
Cantonese:
Monday - Friday: 9:00 a.m. to 5:00 p.m
2836-8763
Saturday: 9:00 a.m. to 1:00 p.m.
Putonghua:
Sunday and public holidays: Closed
2836-8773
English:
2291-8038
Cantonese:
Monday - Friday: 9:00 a.m. to 5:00 p.m.
2232-3882
Saturday: 9:00 a.m. to 1:00 p.m.
Putonghua:
Sunday and public holidays: Closed
2232-3883
English:
2232-3887
Please contact any of Monday - Friday: 9:00 am to 5:00 pm
DBS Bank (Hong
Saturday: 9:00 am to 1:00 pm
Kong) Limited’s
Sunday and public holidays: Closed
branches
Cantonese:
Monday - Friday: 9:00 a.m. to 5:00 p.m.
2850-1228
Saturday: 9:00 a.m. to 1:00 p.m.
Putonghua:
Sunday and public holidays: Closed
2850-1229
English:
2850-1068
2886-8868
Monday - Friday: 9:00 a.m. to 5:30 p.m.
(please press 2*9)
Saturday: 9:00 a.m. to 12:30 p.m.
Sunday and public holidays: Closed
2526-5555
Monday - Friday: 9:00 a.m. to 5:00 p.m.
Saturday: 9:00 a.m. to 1:00 p.m.
Sunday and public holidays: Closed
Chiyu Banking
Corporation Limited
DBS Bank (Hong
Kong) Limited
Nanyang Commercial
Bank, Limited
Standard Chartered
Bank (Hong Kong)
Limited
Wing Lung Bank
Limited
Service hours
Warning:
The internet and telephone application facilities are provided by the above placing banks
at their own initiatives. Neither China Eximbank, the Securities and Futures Commission
nor the joint lead managers and bookrunners take any responsibility for such application
facilities, including the application procedures and processes adopted by the placing
banks.
Please note that internet and telephone application facilities may have capacity limitations
and/or be subject to service interruptions from time to time. To ensure that you can give
your application instructions to your chosen placing bank through such application
facilities, you are advised to allow ample time, and not to wait until the last day of the
subscription period, to give your application instructions. In the event that you have
problems connecting to the online or telephone application facilities offered by your
chosen placing bank, you may go to any designated branch of your chosen placing bank
to give the application instructions in person to your placing bank before the end of the
subscription period.
— 21 —
MORE INFORMATION ABOUT THE BONDS AND THIS OFFERING CIRCULAR
These are the answers to some frequently-asked questions:
What Are the Benefits of Investing in These Bonds?
The bonds:
•
provide regular interest payments for the entire term of your investment; and
•
provide an opportunity for you to invest in a Renminbi-denominated instrument.
Who Should Buy the Bonds? Are They Suitable for Everyone?
The bonds are designed for investors who:
•
wish to invest in Renminbi-denominated bonds providing periodic fixed interest payments and
principal repayment in Renminbi at maturity;
•
are looking for a buy-to-hold product and do not need to sell their bonds before maturity for
liquidity needs; and
•
understand that when they invest in the bonds, they will be relying on China Eximbank’s
creditworthiness alone.
Is China Eximbank Rated?
China Eximbank’s current credit ratings are as below:
Moody’s Investors Services, Inc.
Senior unsecured debt rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A1
Fitch Ratings Inc.
Senior unsecured debt rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A+
Standard & Poor’s Ratings Group
Long-term foreign issuer credit rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A+
You may check China Eximbank’s latest credit ratings on China Eximbank’s website:
www.eximbank.gov.cn. Any credit ratings reflect only the views of the credit rating agencies. They are not
a recommendation to buy, sell or hold securities and are subject to change, update or withdrawal at any
time.
The bonds are not rated. Neither has China Eximbank solicited or otherwise induced any rating
agency to provide a rating, formal or informal, to the bonds offered by this offering circular.
What Will Be Your Investment Return if You Buy the Bonds?
China Eximbank will repay the principal amount of the bonds you buy on the scheduled maturity date
in Renminbi.
China Eximbank will pay interest in Renminbi at the fixed coupon rate, which is a yearly rate, on
each scheduled interest payment date of the bonds every six months.
The amount of interest payable is calculated on the principal amount of the bonds and not on the
subscription price. As China Eximbank pays your annual interest semi-annually, your effective annualized
yield may be a little higher than the stated coupon because you receive half of the annual interest after six
months.
Remember also to take into account the fees you will incur in ordering the bonds and in setting up
and maintaining a securities or investment account at a bank that will hold your bonds.
— 22 —
What if the Bonds Are Over-subscribed?
China Eximbank intends to allocate at least one bond to every investor who applies. The remaining
bonds will then be allocated to investors approximately in proportion to the number of bonds each investor
validly applied for. If the bonds are over-subscribed to the extent that China Eximbank cannot even
allocate one bond to each applicant, China Eximbank will choose by ballot.
Can You Sell Your Bonds Before Their Maturity?
Yes, you may sell your bonds before their maturity. If you try to sell your bonds before maturity, you
may receive an offer which is less than the amount you invested; or you may not be able to sell your bonds
at all. Because the denomination of the bonds is Rmb 10,000, you may sell the bonds of Rmb 10,000 or
integral multiples of Rmb 10,000 in nominal principal amount. You can contact the placing bank that holds
your bonds at any time after the issue date to ask for a price at which you can sell your bonds. Each placing
bank has agreed with China Eximbank to quote prices, if it can. However, the placing banks may in the
future be unable to quote a price or may decide to discontinue this service. Prices quoted by different
placing banks may not be the same.
A price will be quoted for the bonds based on a percentage of the notional amount and the interest
accrued on the bonds.
China Eximbank is not responsible for the establishment or maintenance of a secondary trading
market in the bonds.
The trading price of the bonds will fluctuate depending on factors such as market interest movements,
the financial condition and results of operations of China Eximbank, the market’s view of the credit quality
of China Eximbank and the market price for similar securities. Also, the price of the bonds could be
affected if there are only very few potential buyers in the market for the bonds.
The bonds are not listed and cannot be traded on The Stock Exchange of Hong Kong Limited.
Where Can You Find More Information About the Issuer and the Bonds?
Please read this offering circular carefully before you decide whether to buy the bonds. This offering
circular contains important information, including information about:
•
China Eximbank’s business, financial condition and profitability;
•
risks of buying the bonds;
•
PRC and Hong Kong SAR taxation applicable to the bonds;
•
arrangements for holding and transferring bonds in CMU and how China Eximbank makes
payments and gives notices while the bonds are held in CMU;
•
terms and conditions of the bonds set out in this offering circular, including what happens if
China Eximbank defaults; and
•
how your placing bank is likely to hold your bonds and receive notices and payments from
China Eximbank on your behalf.
You can ask for a printed copy of this offering circular at any placing bank where you can buy the
bonds. This offering circular is also available in Chinese from any placing bank.
You can inspect during normal business hours at the specified office of the fiscal agent conformed
copies of the global bond attached with full terms and conditions, copies of the approval for the issuance
of the bonds, the fiscal agency agreement, and other documents in connection with the offering of the
bonds set out in the section entitled “General Information” in this offering circular.
— 23 —
China Eximbank has not authorized anyone to give you any information about itself or the bonds
other than the information in this offering circular. You should not rely on any other information.
During the life of the bonds, China Eximbank will give notice to the investors in the bonds of any
changes in the financial condition of, or other circumstances relating to, China Eximbank that could
reasonably be expected to materially and adversely affect China Eximbank’s ability to meet its obligations
under the bonds.
Any notices China Eximbank gives after the bonds are issued will be given to the placing banks
through the fiscal agent. You will have to rely on your placing bank to forward the notices to you.
Do You Have to Pay any Stamp Duty on the Bonds?
No, there is no stamp duty payable on the issue or transfer of the bonds in Hong Kong SAR.
Please refer to the section entitled “Taxation of Bonds” in this offering circular for further
information.
— 24 —
RISK FACTORS
Your investment in the bonds involves risks, including those inherent in any investment. Not all of
these risks can be described in this offering circular. You should consider carefully the following risks,
together with other information contained in this offering circular, before you decide whether to invest in
the bonds.
The PRC Government Does Not Guarantee the Bonds
Although China Eximbank is wholly owned by the PRC central government and the People’s Bank
of China is authorized and obligated pursuant to the Special Decree to provide short-term loans to China
Eximbank if it experiences any liquidity shortages, its borrowings and other obligations, including the
bonds, are not guaranteed by the PRC government. The liquidity support obligation of the People’s Bank
of China does not constitute a guarantee with respect to the obligations of China Eximbank under the
bonds. You may not enforce such liquidity support obligation against the People’s Bank of China or the
PRC government. Nor does it confer upon you any other right under or in respect of the Special Decree.
As a Policy Bank in China, Profit Maximization Is Not the Primary Objective of China Eximbank
China Eximbank is a government policy-oriented statutory financial institution and its primary
purpose is to provide policy-oriented financial support for the export and import of capital goods and
related services in accordance with the PRC government’s industrial and foreign trade policies. China
Eximbank aims to supplement commercial financing by absorbing some of the repayment risks that the
commercial and private sectors are unable or unwilling to absorb and by providing financing to PRC
exporters and foreign importers when commercial and private financing is not commercially available.
Different from commercial banks, China Eximbank does not seek to maximize profits although it is not an
aid agency either. Because China Eximbank engages in such policy-oriented projects, China Eximbank has
relied and will continue to rely on financial and other support from the PRC government in its operations,
including significant fiscal subsidies from the Ministry of Finance on an annual basis, to compensate China
Eximbank for losses incurred in its policy-oriented banking operations. Therefore, you should not expect
China Eximbank to maximize or otherwise increase its operating profits to service the bonds. As a result,
China Eximbank’s policy-oriented operations may have adverse effects on its ability to satisfy its
obligations under the bonds.
China Eximbank’s Credit Portfolio and Its Operations Are Exposed to the Risk of Borrower Default
As an instrumentality for implementing the PRC government’s industrial and foreign trade policies,
China Eximbank provides financial support for the export and import of capital goods and related services
in line with the PRC government’s development strategy and industrial and foreign trade policies.
Although some of its export/import credit support projects are recommended by PRC governmental
agencies and China Eximbank evaluates each project in accordance with its own evaluation standards
before it approves an export/import credit, China Eximbank cannot assure, however, that the credibility of
its borrowers will not change or that there will be no default by its borrowers or failure by their guarantors
to meet their payment and other obligations. China Eximbank’s evaluation standards are also subject to
periodic review and may not remain unchanged for any given period of time. In addition, China Eximbank
may suspend, down-grade or withdraw the credit quality rating it accords to any export/import credit at any
time if in its judgment circumstances so warrant. If the quality of China Eximbank’s export/import credit
portfolio should deteriorate, the business, financial condition and results of operations of China Eximbank
may be adversely affected. In addition, if the loan principal loss reserve maintained by China Eximbank
as of the end of each year proves to be insufficient to cover its loan losses, China Eximbank may have to
apply for additional fiscal subsidies from the Ministry of Finance, or else its business, financial condition
and results of operations may deteriorate. Such deterioration of China Eximbank’s credit portfolio and/or
lack of additional financial support from the PRC government may in turn adversely affect China
Eximbank’s ability to service its bonds and to satisfy its other obligations under the bonds.
— 25 —
If China Eximbank Is Unable to Realize the Collaterals or Guarantees Securing the Outstanding
Principal and Interest of Its Loans and/or Credit Facilities, China Eximbank’s Financial Condition
and Results of Operations May Be Adversely Affected
A significant portion of China Eximbank’s loans and credit facilities are secured by collaterals and/or
guarantees. For example, most of China Eximbank’s export credits are collateralized with credit
enhancement arrangements, including guarantees from borrowers’ sponsors, banks or affiliated companies
and security interests in borrowers’ real or other assets. Most of China Eximbank’s foreign exchange
guarantees are collateralized with counter-guarantees from the borrowers’ sponsors, local banks or
affiliated companies or with security interests in the borrowers’ real or other properties.
China Eximbank’s credit collaterals primarily include real or other assets in mainland China, the
value of which may decline due to factors beyond China Eximbank’s control, including macroeconomic
factors affecting the PRC economy or any relevant regional economy, or specific market value fluctuations
of such assets. In particular, an economic slowdown in China may lead to a downturn in the PRC real estate
markets, which may in turn result in declines in the value of the real estate collaterals securing many of
China Eximbank’s financing activities to levels below the outstanding principal balance of such loans
and/or credit facilities. Credit guarantees are subject to more factors affecting their strength as credit
enhancements, including the credit-worthiness of the guarantors from time to time. In addition, China
Eximbank’s exposure to such guarantors is generally unsecured, and a significant deterioration in the
financial condition of these guarantors will increase the risk that China Eximbank may not be able to
recover the full amount of such guarantees if and when required. Any significant decline in the value of
the collaterals securing China Eximbank’s loans and/or credit facilities may result in a reduction in the
amount China Eximbank can recover from collateral realization and an increase in its impairment losses.
Due to the diverse nature of the collaterals securing China Eximbank’s credit projects or guarantee
projects and the potential lack of liquidity of such collaterals, there can be no assurance that, in the event
of foreclosure upon any credit collateral, China Eximbank would be able to recover, if at all, the full
amount owed to it from the disposal of such collateral.
China Eximbank’s Business Is Affected by PRC Economic, Political and Social Conditions and PRC
Foreign Policies
Substantially all of China Eximbank’s businesses, assets and operations are located in mainland
China. Accordingly, its operations and financial performance are, to a significant degree, subject to the
economic, political and social conditions and developments in mainland China. China has been one of the
fastest growing economies in the world in terms of GDP growth in recent years. However, China may not
be able to sustain such growth in the future. In additions, China, as a sovereign state, maintains diplomatic
relations with 171 countries and trade and economic relations with over 220 countries and regions in the
world, 15 of which have signed free trade agreements with China. China Eximbank, as a government
instrumentality executing and implementing China’s foreign policies and foreign trade policies, is
primarily engaged in trade related and other financing transactions involved directly or indirectly in these
countries and regions. Some of these countries and regions do not have diplomatic or trade relations with
other countries in the world and some of them may be subject to trade or economic sanctions imposed by
such other countries. China Eximbank will continue to implement China’s foreign policies and foreign
trade policies and cannot assure you that China Eximbank will not continue to engage in such trade related
and other financing transactions involving these countries and regions or that trade related or other
financing transactions involving these countries and regions will not increase in the future, pursuant to
China’s foreign trade policies.
In 2008, the global credit markets experienced significant dislocation and uncertainty as a result of
liquidity disruptions in the U.S. credit and sub-prime residential mortgage markets since the second half
of 2007. These and other related events, such as the collapse of a number of financial institutions, have
resulted in an economic slowdown in the United States and most economies around the world, substantial
volatility in financial markets globally, fluctuations in foreign currency exchange rates and volatility and
tightening of liquidity in global financial markets. In early 2010, fears of a sovereign debt crisis in some
European countries (including Greece, Ireland, Italy, Spain and Portugal) have again caused uncertainty to
the global financial markets. The uncertain global economic outlook, together with the withdrawal or
— 26 —
potential withdrawal of existing monetary and fiscal stimulus put in place by various governments, may
have an adverse impact on the global economy which may in turn affect China. If China experiences any
significant economic downturn, China Eximbank’s business, financial condition and results of operations
could be adversely affected, which in turn may adversely affect China Eximbank’s ability to service its
bonds and to satisfy its other obligations under the bonds.
The Bonds Are Not Equivalent to a Time Deposit and Involve Investment Risks
Investments in the bonds involve risks. The bonds are an investment product and are not equivalent
to a time deposit. They are not protected under the deposit protection scheme maintained by the Hong
Kong Deposit Protection Board and payments of interest or principal on the bonds are not guaranteed by
the Hong Kong SAR Government’s Exchange Fund. You should not invest in the bonds unless the placing
bank who sells the bonds to you has explained to you that the bonds are suitable for you having regard to
your financial situation, investment experience and investment objectives, and you understand how the
bonds work and are willing to assume the associated risks.
The Bonds Have a Limited Upside
The bonds carry a fixed interest rate of 2.65% per year which is paid semi-annually in arrear. Upon
maturity, China Eximbank will pay investors in the bonds the principal amount of the bonds plus any
unpaid accrued interest. The maximum return on an investment in the bonds is limited to these interest
payments. As the bonds are fixed income securities structured to provide investors with returns primarily
through regular interest payments thereon, investors in the bonds, whether holding the bonds through to
maturity or disposing of the bonds in the secondary market, may not realize any capital gain.
The Trading Market for the Bonds Is Expected to Be Limited and Illiquid, and the Bonds Are Not
Covered by the Investor Compensation Fund
China Eximbank’s bonds will not be listed and cannot be traded on The Stock Exchange of Hong
Kong Limited or any other securities exchanges. As the bonds are not listed, you are not covered by the
Investor Compensation Fund if your placing bank or any other intermediary defaults. Some or all of the
placing banks that sell the bonds in this offering will make a market for the bonds in over-the-counter
transactions. These banks will agree with China Eximbank to quote prices at which they will buy the bonds
in the market if they can, but they may in the future be unable to quote a price or may decide to discontinue
this service. China Eximbank is not responsible for the establishment or maintenance of a secondary
trading market in the bonds.
The bonds are designed to be held to maturity and have no liquid secondary market. If you try to sell
your bonds, you may not be able to find a buyer, or the sale price could be much lower than the amount
you invested. In addition, the trading price of the bonds will fluctuate depending on factors such as market
interest movements, China Eximbank’s financial condition and results of operations, the market’s view of
China Eximbank’s credit quality and the market price for similar securities. In addition, the price of the
bonds could be affected if there are only very few potential buyers in the market for the bonds.
Your Investment in the Bonds Is Subject to Exchange Rate Risks
The value of Renminbi against the Hong Kong dollar and other foreign currencies fluctuates and is
affected by changes in the PRC and international political and economic conditions and many other factors.
China Eximbank will make all payments of interest and principal with respect to the bonds in Renminbi.
As a result, the value of these Renminbi payments in Hong Kong dollar terms may vary with the prevailing
exchange rates in the marketplace. For example, when you buy the bonds, you may convert your Hong
Kong dollars to Renminbi at the exchange rate available at that time. If the value of Renminbi depreciates
against the Hong Kong dollar between then and when China Eximbank pays back the principal of the bonds
in Renminbi at maturity, the value of your investment in Hong Kong dollar terms will have declined.
Your Investment in the Bonds Is also Subject to Interest Rate Risks
The PRC government has gradually liberalized the regulation of interest rates in recent years. Further
liberalization may increase interest rate volatility. The bonds will carry a fixed interest rate. Consequently,
the trading price of the bonds will vary with the fluctuations in the Renminbi interest rates. If you try to
sell your bonds before their maturity, you may receive an offer that is less than the amount you have
invested.
— 27 —
Your Investment in the Bonds is Subject to China Eximbank’s Creditworthiness
China Eximbank a statutory financial institution organized under the laws of mainland China. When
purchasing the bonds, you will be relying upon China Eximbank’s creditworthiness. There is no assurance
that China Eximbank’s creditworthiness will not decline as a result of either internal or external factors,
such as China Eximbank’s results of operations or general macroeconomic factors. If China Eximbank
becomes insolvent or defaults on its obligations under the bonds, you can only claim against China
Eximbank as an unsecured creditor. In the worst case scenario, you may lose all of the value of your
investment.
Renminbi Is Not Freely Convertible and May Adversely Affect the Liquidity of the Bonds
Renminbi is not freely convertible at present. The PRC government continues to regulate conversion
between Renminbi and foreign currencies, including the Hong Kong dollar, despite the significant
reduction over the years by the PRC government of its control over routine foreign exchange transactions
under current accounts. Participating banks in Hong Kong SAR have been permitted to engage in the
settlement of Renminbi trade transactions under the pilot scheme introduced in July 2009. This represents
current account activity. The pilot scheme was extended in June 2010 to cover twenty provinces and cities
in China and to make Renminbi trade and other current account item settlement available in all countries
worldwide. Since February 2004, in accordance with arrangements between the PRC central government
and the Hong Kong SAR government, licensed banks in Hong Kong SAR may offer limited
Renminbi-denominated banking services to Hong Kong SAR residents and specified business customers.
Hong Kong SAR residents are permitted to convert limited amounts of foreign currencies, including Hong
Kong dollars, into Renminbi at such banks on a per-day basis. The People’s Bank of China has also
established a clearing and settlement system for participating banks in Renminbi banking in Hong Kong
SAR. On July 19, 2010, further amendments were made to the Settlement Agreement on the Clearing of
Renminbi Business between the People’s Bank of China and Bank of China (Hong Kong) Limited, the
Renminbi clearing bank in Hong Kong SAR, to further expand the scope of Renminbi business for banks
in Hong Kong SAR. Pursuant to the revised arrangements, all corporates (including investment banks and
broker-dealers) are allowed to open Renminbi accounts in Hong Kong SAR; there is no limit on the ability
of corporates to convert Renminbi; and there is no longer restriction on the transfer of Renminbi funds
between different accounts in Hong Kong SAR. However, the current size of Renminbi-denominated
financial assets is limited in Hong Kong SAR, its growth is subject to many constraints which are corollary
of PRC laws and regulations on foreign exchange and may adversely affect the liquidity of China
Eximbank’s bonds.
Gains on the Transfer of the Bonds May Become Subject to Income Taxes under PRC Tax Laws
Under the PRC Enterprise Income Tax Law and its implementation rules which took effect on January
1, 2008, any gain realized on the transfer of bonds by non-resident enterprise investors may be subject to
enterprise income tax if such gain is regarded as income derived from sources within mainland China.
While the PRC Enterprise Income Tax Law establishes such capital gain tax rate for non-resident
enterprises at 20% of the gross proceeds, its implementation rules have reduced the rate to 10%. As the
PRC Enterprise Income Tax Law and its implementation rules are relatively new, there remains uncertainty
as to whether the gain realized from the transfer of the bonds would be treated as income derived from
sources within mainland China and be subject to the PRC tax. This will depend on how the PRC tax
authorities interpret, apply or enforce the PRC Enterprise Income Tax Law and its implementation rules.
According to the arrangement between mainland China and Hong Kong SAR, residents of Hong Kong
SAR, including enterprise investors and individual investors, will not be subject to PRC tax on any capital
gains derived from a sale or exchange of the bonds.
— 28 —
Therefore, if you, as a non-resident enterprise, are required to pay PRC income tax on capital gains
on the transfer of the bonds, your capital gains from the bonds will be levied at the current rate of 10%
of your gross proceeds from the transfer, unless there is an applicable tax treaty between mainland China
and the jurisdiction in which you, as a non-resident enterprise investor in the bonds, reside that reduces
or exempts the relevant tax. If such capital gain tax is levied, the value of your investment in the bonds
may be materially and adversely affected.
You Do Not Have Direct Contractual Rights to Enforce the Bonds
The bonds will be represented by a single global bond and no individual bearer certificates will be
issued to you with respect to your holding of the bonds. The global bond will be deposited for safekeeping
with a sub-custodian for CMU.
Your placing bank will arrange to hold your bonds for you in an account at CMU, through either its
own account or the account of its direct or indirect custodian with CMU. China Eximbank will pay interest
and principal on the bonds to the bank accounts of the CMU account-holders notified to China Eximbank
by CMU as persons for whose accounts interests in the global bond are credited in accordance with the
rules and procedures of CMU. For any payments that need to be made under the bonds, China Eximbank
will treat such CMU account-holders as the bondholders. As a result, you do not have any direct
contractual rights against China Eximbank if it fails to pay any amount under the bonds in accordance with
the terms and conditions of the bonds. To assert your rights as an investor in the bonds, you will have to
rely on your placing bank to take action against China Eximbank.
However, if your placing bank fails to enforce any rights against China Eximbank on your behalf, or
if your placing bank becomes insolvent or defaults on its obligations, you will need to take action against
your placing bank subject to the terms of the account agreement or customer agreement or term of business
between you and your placing bank. Your placing bank will be able to explain to you your rights against
it in this regard. Depending on the account agreement or customer agreement or term of business between
you and your placing bank, upon insolvency or default of your placing bank, you may only have a claim
as the unsecured creditor of your placing bank regardless of the status of the bonds. Even if the bonds you
invest in do not form part of the pool of assets which are applied toward satisfying the claims of the general
unsecured creditors of the insolvent or defaulted placing bank, there could still be substantial delay before
you could receive the interest and/or principal amount of the bonds. In the worse case scenario, you could
lose all your investment. When you buy the bonds, you are required to confirm that you understand and
agree that China Eximbank accepts no responsibility for the provision of bank services and custody
services by the placing banks or for any consequences of, or arising from, the use of the bank account and
the investment account or custody services of such placing banks.
Claims by Investors in the Bonds Are Effectively Subordinated to All China Eximbank’s Secured
Debt
Payments under the bonds are effectively subordinated to all China Eximbank’s secured debt to the
extent of the value of the assets securing such debt. The effect of this subordination is that, in the event
of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving China Eximbank,
the assets of China Eximbank could not be used to pay you as an investor in the bonds until after all
secured claims against China Eximbank have been fully paid.
If China Eximbank Is Unable to Comply with the Restrictions and Covenants Contained in Its Debt
Agreements, Including the Bonds, an Event of Default Could Occur under the Terms of Such
Agreements, which Could Cause Repayment of Such Debt to Be Accelerated
If China Eximbank is unable to comply with the restrictions and covenants governing the bonds, or
its other current or future debt agreements, there could be a default under the terms of these agreements.
In the event of a default under these agreements, the holders of the debt could terminate their commitment
to lend to China Eximbank, accelerate the relevant debt and declare all amounts borrowed thereunder due
and payable or terminate the agreements, whichever the case may be. Any such event of default could have
a material adverse effect on China Eximbank’s obligations under the bonds.
— 29 —
You May Experience Difficulties in Enforcing Judgments and Effecting Service of Legal Process
Against China Eximbank and its Management
China Eximbank is a statutory financial institution organized under the laws of mainland China and
the majority of its business, assets and operations are located in mainland China. In addition, all of China
Eximbank’s senior officers reside in mainland China. You may experience difficulties in effecting service
of process upon China Eximbank and such officers, including with respect to matters arising under
applicable securities law. The High Court of Hong Kong SAR typically entrusts a PRC Higher People’s
Court of competent jurisdiction to effect the service of legal documents. As a result of the differences in
the legal systems between Hong Kong SAR and mainland China as well as the procedures for service of
process in the two jurisdictions, the service of legal documents through the PRC Higher People’s Courts
via such entrustment arrangement may be subject to delay. The laws which China Eximbank is subject to
are different from the laws in other jurisdictions, including Hong Kong SAR, in certain material respects.
Moreover, to the best of China Eximbank’s knowledge, China is not a party to any treaties with most of
the Western nations that provide for reciprocal enforcement of court judgments.
The reciprocal recognition and enforcement of certain judgments under the Arrangement on
Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of
the Mainland and of Hong Kong Pursuant to Choice of Court Agreements Between Parties Concerned is
applicable only when the parties have expressly agreed to submit to the exclusive jurisdiction of either the
PRC courts or the Hong Kong SAR courts. China Eximbank has not, however, elected to submit to the
exclusive jurisdiction of either the PRC courts or the Hong Kong SAR courts on matters arising out of or
based on the bonds, the fiscal agency agreement or other related agreements. As a result, the PRC courts
may avail themselves of the following grounds, among others, to refuse to recognize or enforce judgments
of the Hong Kong SAR courts:
•
the judgment was obtained by fraud;
•
the judgment was not final and conclusive;
•
the judgment was not for a definite sum of money; and
•
the judgment either contradicted the basic principles of the PRC law or violated its state
sovereignty, security and public interest.
In the event that the PRC courts refuse to recognize or enforce judgments of the Hong Kong SAR
courts on matters arising out of or based on the bonds, the fiscal agency agreement or other related
agreements on the basis of the above or other grounds, the legal protections and remedies available to you
as China Eximbank’s investor may be adversely affected.
China Eximbank’s Accounting Principles and Practices May Differ from Those in Other
Jurisdictions
China Eximbank prepares and presents its consolidated financial statements in accordance with the
accounting principles and practices set forth in Note I to the consolidated financial statements in the Report
of General Manager (Accounting Department) included in the section entitled “Financial Accounting
Matters” beginning on page F-1 of this offering circular, and may differ in material respects from generally
accepted accounting principles in other jurisdictions. The section entitled “Significant Differences
Between PRC Accounting Standards and International Financial Reporting Standards” in this offering
circular contains a summary of significant differences between the PRC accounting standards and the
International Financial Reporting Standards, or IFRS, as applicable to China Eximbank.
China Eximbank has not identified the differences between its accounting principles and practices
and those accounting principles generally accepted in other jurisdictions. Although China Eximbank has
provided a summary of significant differences between the PRC accounting standards and IFRS in this
offering circular, China Eximbank has not quantified the effect of applying IFRS to its financial
information. In making an investment decision, you must make your own judgment in assessing the
financial information included in China Eximbank’s consolidated financial information, and you should
consult your own professional advisers, if necessary, to understand the differences between China
Eximbank’s accounting principles and practices and the generally accepted accounting principles of other
jurisdictions that you are familiar with and how those differences might affect China Eximbank’s financial
information.
— 30 —
CAPITALIZATION
As of December 31, 2009, the capitalization of China Eximbank was as follows:
As of December 31, 2009
(in thousands of Rmb)
Long-term Debt (1):
Foreign Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,656,400
381,937,940
Total Long-term Debt (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
398,594,340
Capital Accounts:
Paid-in Capital . . . . . .
Capital Reserves . . . . .
General Risk Reserves.
Surplus Reserves . . . . .
Undistributed Profits . .
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5,000,000
13,593
3,571,174
394,053
1,210,064
Total Owner’s Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,188,883
Total Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
408,783,224
(1)
Long-term debt includes all debt with a maturity of one year or longer. This capitalization table excludes the portion
of long-term debt maturing prior to December 31, 2010. As of December 31, 2009, China Eximbank had total
outstanding long-term debt (including the current portion) of approximately Rmb 589.8 billion.
(2)
The following table sets forth the principal repayment schedule with respect to outstanding total long-term debt as of
December 31, 2009:
Year
Rmb
(in thousands)
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,344,100
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114,243,840
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
186,006,400
Unless otherwise disclosed in this offering circular, there has not been any material change in the
capitalization of China Eximbank since December 31, 2009.
USE OF PROCEEDS
China Eximbank intends to use the net proceeds from the sale of the bonds to fund
Renminbi-denominated export credits extended by China Eximbank and for general corporate purposes.
— 31 —
BUSINESS
Purpose and Authority
China Eximbank was established on April 26, 1994 pursuant to the Special Decree as a
policy-oriented statutory financial institution under the direct authority of the State Council, the highest
institution of the PRC government administration. It is the only government export credit agency in China.
Pursuant to the Special Decree, China Eximbank operates on an autonomous basis and conducts its
activities under the direct leadership of the State Council. China Eximbank is subject to the supervision
and direction of the People’s Bank of China, the China Banking Regulatory Commission, the Ministry of
Finance, the Ministry of Commerce and the National Development and Reform Commission with respect
to its business activities.
The primary purpose of China Eximbank is to provide policy-oriented financial support for the export
and import of capital goods and related services in accordance with the PRC government’s industrial and
foreign trade policies. China Eximbank aims to supplement commercial financing by absorbing some of
the repayment risks that the commercial and private sectors are unable to absorb and by providing
financing to PRC exporters and foreign importers when commercial and private financing is not available.
Consistent with its purpose as an instrumentality of China’s national economic development policy and in
accordance with its articles of association and instructions and requirements of the State Council, China
Eximbank’s current principal activities include:
•
extending credits in Renminbi and foreign currencies to and issuing guarantees to support
financings by exporters and importers of capital goods, such as mechanical and electric
products, equipment systems, new and high technology products, manufactured in China;
•
extending credits and issuing guarantees to support the establishment of manufacturing
facilities overseas by PRC enterprises;
•
extending credits and issuing guarantees to support the exploration and development of
resources overseas by PRC enterprises;
•
extending credits and issuing guarantees to support the construction of large projects overseas
by PRC enterprises;
•
extending concessional loans on behalf of the PRC government to developing countries
pursuant to the PRC government’s foreign policy;
•
raising funds in domestic and overseas capital markets to finance its business;
•
on-lending foreign government credits to PRC end-users as agent for the PRC central
government; and
•
engaging in international inter-bank lending, and organizing and participating in domestic and
international lending syndicates.
China Eximbank may also engage in other lines of business approved by the PRC central government
from time to time. As an instrumentality serving the policy objectives of the PRC government, China
Eximbank does not seek to maximize profits, nor is it an aid agency. Rather, it seeks to achieve moderate
profitability while preserving capital as mandated in the Special Decree.
At present, China Eximbank has 16 operational branches, namely, the Beijing branch, the Shanghai
branch, the Shenzhen branch, the Nanjing branch, the Dalian branch, the Chengdu branch, the Qingdao
branch, the Zhejiang branch, the Hunan branch, the Chongqing branch, the Shaanxi branch, the Hubei
branch, the Heilongjiang branch, the Guangdong branch, the Yunnan branch and Ningbo branch. China
Eximbank also has one domestic representative office located in Fuzhou, and three overseas representative
offices, one based in Johannesburg, South Africa, servicing Southern and Eastern Africa, one based in
Paris, France, servicing Europe and North Africa and the third based in St. Petersburg, Russia, servicing
— 32 —
Russia and East European countries. These branches and offices, located near various project sites,
enhance China Eximbank’s ability to implement its credit management policy and to improve monitoring
of its credit projects. In addition, China Eximbank has maintained agency relationships with 1,099
branches of over 500 domestic and foreign banks in 152 countries and regions.
Relationship with the PRC Government
Government Ownership. As a PRC government instrumentality under the State Council, China
Eximbank has no share capital, and no person other than the PRC government has, or can obtain, an
ownership interest or equity participation in China Eximbank. China Eximbank has a registered capital of
Rmb 5.0 billion, all of which has been contributed by the PRC central government through its Ministry of
Finance. In addition, because of China Eximbank’s role in the implementation of the economic and
industrial policies of China, the Ministry of Finance has confirmed that it will provide further support to
China Eximbank through the provision of fiscal subsidies and additional capital. All of China Eximbank’s
net income is subject to disposal by the PRC central government for the benefit of the PRC.
Government Supervision. China Eximbank’s operations are subject to the direct leadership of the
State Council and to the additional supervision of the People’s Bank of China, the China Banking
Regulatory Commission, the Ministry of Finance, the Ministry of Commerce and the National
Development and Reform Commission. Pursuant to the Special Decree, the articles of association of China
Eximbank were adopted by the State Council and may be amended only with its approval.
At the end of each year, China Eximbank submits its annual credit and funding plans for the
following year to the People’s Bank of China for approval. In addition, China Eximbank reports to the
People’s Bank of China periodically with respect to the implementation of its annual credit and funding
plans and any significant issues relating to its credit operations. China Eximbank’s finance-related
activities are subject to the supervision and direction of the China Banking Regulatory Commission and
People’s Bank of China. China Eximbank submits its semi-annual consolidated reports of its results of
operations and annual consolidated financial statements to the Ministry of Finance for review and
approval. The Ministry of Commerce provides guidance to China Eximbank with respect to China’s
policies on foreign trade and matters of foreign economic cooperation as well as policies on concessional
loans made by China Eximbank. China Eximbank is subject to the supervision of the Ministry of Finance
with respect to the foreign government credits on-lending business. The National Development and Reform
Commission provides guidance to China Eximbank with respect to China’s industrial policies and foreign
investment policies.
The board of directors of China Eximbank was established with the approval of, and is responsible
directly to, the State Council. The Special Decree provides that the board of directors shall have the
ultimate policy-making power within China Eximbank and shall consist of the president and vice
presidents of China Eximbank and representatives from various government agencies, including the
National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, the
People’s Bank of China and others. The president and vice presidents of China Eximbank are appointed
directly by the State Council. For more information about the functions of the board of directors and the
president and vice presidents, see “Management” below. Since early 2000, like every other major
state-owned financial institution, China Eximbank has been subject to on-site supervision of financial
institution supervisors designated by the State Council.
Government Support. In addition to contributions to the capital of China Eximbank, the PRC
government provides direct and indirect financial support for the business activities of China Eximbank.
Following the submission by China Eximbank of its projected annual business operations and sources of
funds for such business operations to the Ministry of Finance, the Ministry of Finance determines, on an
annual basis in accordance with China Eximbank’s funding requirements and in coordination with other
relevant PRC central government agencies, the aggregate amount of financial resources to be made
available to China Eximbank in support of its credit activities. According to the Special Decree, sources
of funds available to China Eximbank include: (a) capital contribution by the PRC central government, (b)
fiscal subsidies from the Ministry of Finance, (c) short-term loans provided by the People’s Bank of China,
and (d) borrowings from domestic and foreign financial institutions, including debt securities issued
overseas and financial debentures issued to domestic financial institutions.
— 33 —
Pursuant to the Special Decree, the People’s Bank of China is authorized and obligated to provide
short-term loans to China Eximbank in the event China Eximbank experiences any liquidity shortages. The
obligation of the People’s Bank of China to make such loans to China Eximbank does not constitute a
guarantee of the bonds, and is not enforceable against the People’s Bank of China by, and does not confer
any right under or in respect of the Special Decree upon, any investor in the bonds and holders of other
indebtedness of China Eximbank. To the extent China Eximbank’s actual liquidity needs in any fiscal year
require greater financial support on a longer term basis, China Eximbank will report this need to the
People’s Bank of China, which will decide whether to increase the amount of long-term borrowings that
China Eximbank is permitted to make during the year.
The Ministry of Finance also provides support to China Eximbank in the form of fiscal subsidies,
which are allocated each year in the annual budget of the PRC central government, to compensate China
Eximbank for losses incurred in its policy oriented banking operations. Each year, the Ministry of Finance
provides such subsidies in accordance with the relevant PRC central government policy to reflect the total
policy-oriented credit operations of China Eximbank as well as its cost of funds.
Designated Lender of Government Concessional Loans. China Eximbank acts as the only
designated lending institution for the PRC central government in connection with concessional loans to
borrowers in developing countries selected by the PRC government. China Eximbank is protected against
any loss in principal with respect to its concessional loan operations by a concessional loan reserve fund
established by the PRC government for the exclusive use of China Eximbank. As of December 31, 2009,
the reserve fund available for use by China Eximbank was Rmb 500.0 million to cover any losses in
principal resulting from concessional loans. China Eximbank has not experienced any loss in principal
over the years with respect to its concessional loan operations that has required utilization of the reserve
fund. The Ministry of Finance has also undertaken to increase its contribution to this reserve fund based
on China Eximbank’s concessional loan operations. China Eximbank acts as the lender with respect to
these concessional loans and receives subsidies from the Ministry of Finance to compensate for any losses
in interest receipts as a result of the differentials between its borrowing and lending rates as well as
compensation from the Ministry of Finance for certain administrative expenses incurred by China
Eximbank on such concessional loans.
Government On-lending Agent. China Eximbank is a designated on-lending agent for the PRC
central government. China Eximbank has on-lent to PRC end-users credits made available to the PRC
central government by foreign governments through their financial institutions. To the extent that the
on-lending borrowers are PRC central or provincial governmental agencies or otherwise guaranteed by
PRC central or provincial governmental agencies, China Eximbank will not consolidate such on-lending
operations into its consolidated financial statements. If any such PRC end-user fails to make its payments
in a timely manner, China Eximbank is obligated to make timely payments to the relevant foreign
governmental lenders or foreign lending financial institutions with its own funds, subject to subsequent
compensation by the Ministry of Finance. The Ministry of Finance typically compensates China Eximbank
for such losses with funds derived from its fiscal budget debiting arrangements with local governments that
sponsored the end-users or funds from other means. In connection with the on-lending and management
activities for such credits, China Eximbank is entitled to a fee payable by the borrower in the form of a
commission. In accordance with the agency arrangements between China Eximbank and the Ministry of
Finance, China Eximbank is acting as an agent of the Ministry of Finance in administering these on-lent
loans to PRC central or provincial governmental agencies or borrowers guaranteed by PRC central or
provincial governmental agencies. To support China Eximbank in such on-lending agency operations, the
PRC government has established an on-lending support fund that can be drawn on by China Eximbank to
make payments to the foreign governmental lenders on behalf of the PRC central government before full
collection of payments from such PRC end-users. As of December 31, 2008 and 2009, the on-lending
support fund available for use by China Eximbank was the equivalent of US$200.0 million. Although
China Eximbank may be required to front funds toward the payment of the principal, interest and foreign
banking charges on behalf of the Ministry of Finance in accordance with the loan agreements between the
Ministry of Finance and the foreign lenders, to the extent the on-lending support fund is not sufficient to
make such payments, the agency arrangements expressly provide that China Eximbank has no liability for
the payment of any principal, interest or foreign banking charges with respect to any such loan projects
undertaken by PRC central or provincial governmental agencies or otherwise guaranteed by PRC central
or provincial governmental agencies. In its capacity as such on-lending agent, to the extent that the
on-lending borrowers are PRC central or provincial governmental agencies or otherwise guaranteed by
PRC central or provincial governmental agencies, China Eximbank has been fully reimbursed by the
— 34 —
Ministry of Finance with respect to all its fronted funds, including funds from the on-lending support fund
used in each year by China Eximbank to make such payments. See “Financial Accounting Matters —
Report of General Manager (Accounting Department) — Note VII. Balance Sheets of On-lending Loans
of Foreign Governments” beginning on page F-28 in this offering circular. To the extent that the on-lending
borrowers are not PRC central or provincial governmental agencies or otherwise guaranteed by PRC
central or provincial governmental agencies, China Eximbank will have the right to assess the projects
independently, bear the risks in such on-lending operations, and has the final repayment liabilities under
the on-lending agency arrangements with the Ministry of Finance. China Eximbank consolidates its
on-lending business operations with respect to such projects not directly undertaken or otherwise
guaranteed by PRC central or provincial governmental agencies.
Export Credit Operations
China Eximbank’s principal financing activity is the provision of export credits for the manufacture
and export of PRC capital goods. Capital goods eligible for export credit financing currently include
vessels, aircraft, machinery, heavy equipment, power plants and electric products. China Eximbank also
grants export sellers’ credits to support bio-technological and pharmaceutical products, technical services
and overseas investment and construction projects undertaken by PRC companies. China Eximbank
extends export buyers’ credits to foreign importers of China-made equipment, large electro-mechanic
products such as ships, telecommunications equipment, power plants, and railways. Some overseas
construction projects are also financed with export buyers’ credits. Borrowers of export credits are PRC
exporters or sellers and foreign importers or buyers of China-made products. Within the annual credit plan
approved by the People’s Bank of China and in compliance with the PRC government’s trade policies,
China Eximbank enjoys autonomy in the selection of credit projects. As an instrumentality for
implementing the economic and trade policies of the PRC government, it coordinates with the Ministry of
Commerce in the formation of its export support strategies. China Eximbank and its branches accept
applications for credits directly from PRC exporters and foreign importers (acting through their PRC
exporters). China Eximbank evaluates each project and makes its decision as to whether or not to approve
the credit. Subject to its evaluation, China Eximbank also accepts recommendations from PRC
governmental agencies for export credit support. At present, substantially all of the borrowers in China are
state-owned or state-controlled enterprises (including joint stock companies), collectively owned
enterprises, and equity and cooperative joint ventures majority-owned by PRC interests.
Most of China Eximbank’s export credits are collateralized with credit enhancement arrangements,
including guarantees from borrowers’ sponsors, banks or affiliated companies and security interests in
borrowers’ real or other assets. Many of China Eximbank’s credits are secured with one or more such credit
enhancement arrangements. However, due to the nature of certain credit enhancement collateral securing
China Eximbank’s credit projects and the potential lack of liquidity of such collateral, there can be no
assurance that, in the event of foreclosure of any such collateral, China Eximbank would be able to recover
all or any part of the amount owed to it from the disposal of such collateral.
The following table sets forth a breakdown by currency of the total outstanding export credits
extended by China Eximbank as of the dates indicated:
Total Export Credits Outstanding
As of December 31,
2007
2008
2009
(in millions of Rmb)
Sellers’ Credits
Renminbi . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency . . . . . . . . . . . . . . . . . . .
140,213
57,882
152,323
81,016
188,792
92,712
Subtotal . . . . . . . . . . . . . . . . . . . . . . . .
198,095
233,339
281,504
Buyers’ Credits
Foreign Currency . . . . . . . . . . . . . . . . . . .
53,153
71,644
102,776
Total Export Credits . . . . . . . . . . . . . . .
251,248
304,983
384,280
— 35 —
The following table sets forth the total outstanding export credits extended by China Eximbank as
of the dates indicated, categorized by product type:
Total Outstanding Export Credits by Product Type
As of December 31,
2007
2008
2009
Amounts % of Total Amounts % of Total Amounts % of Total
(in millions of RMB, except for percentages)
High-tech Products . .
Overseas Investments
Projects . . . . . . . . . .
Vessels . . . . . . . . . . .
General Electronic
Products . . . . . . . .
Equipment . . . . . . . .
Agricultural Products
Others . . . . . . . . . . .
.
.
.
.
.
.
.
.
55,884
57,394
48,175
42,811
22.2%
22.8
19.2
17.0
53,738
83,215
65,899
39,845
17.6%
27.3
21.6
13.1
64,735
112,295
92,291
43,495
16.8%
29.2
24.0
11.3
.
.
.
.
.
.
.
.
27,684
15,669
3,631
—
11.0
6.2
1.5
—
30,443
21,092
4,975
5,776
10.0
6.9
1.6
1.9
30,603
25,118
5,744
9,998
8.0
6.5
1.5
2.6
Total . . . . . . . . . . . . . .
251,248
100.0%
304,983
100.0%
384,280
100.0%
The classification of export products is based on the catalog released by the PRC government.
•
“High-tech Products” include high-tech electric products, such as telecommunication products,
and non-electric products, such as bio-technology products, pharmaceutical products and other
non-electric products;
•
“Overseas Investments” include loans provided to PRC enterprises for purposes of investing
overseas in foreign businesses and in developing natural resources;
•
“Projects” include construction of power plants, bridges and highways, including procurement
of materials, labor, technology and equipment;
•
“Vessels” include newly built ships for export as well as foreign vessels overhauled at PRC
shipyards;
•
“General Electronic Products” include internal combustion engines, railroad engines, motor
engines and electricity generators, consumer electronics and computers;
•
“Equipment” includes aircraft, vehicles, boilers, other equipment and technical services;
•
“Agricultural Products” include domestic produce and processed agricultural products; and
•
“Others” refers to export products not covered by any of the above product types, such as
certain syndicate loans and certain labor-intensive products and services.
— 36 —
The following table sets forth the actual export credit disbursements by China Eximbank for the
periods indicated, categorized by export destination:
Actual Export Credit Disbursements by Export Destination
Year Ended December 31,
2007
2008
2009
Amounts % of Total Amounts % of Total(1) Amounts % of Total
(in millions of Rmb, except for percentages)
Asia . . . . . . . .
North America .
Europe . . . . . .
Africa . . . . . . .
Latin Americas
Oceania . . . . .
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.
55,370
40,120
25,207
15,960
5,050
5,971
37.5%
27.2
17.1
10.8
3.4
4.0
61,213
39,245
22,373
17,246
3,803
12,486
39.1%
25.1
14.3
11.0
2.4
8.0
85,421
49,781
25,495
37,871
3,371
10,592
40.2%
23.4
12.0
17.8
1.6
5.0
Total . . . . . . . . . . .
147,678
100.0%
156,366
100.0%
212,529
100.0%
The following table sets forth the actual export credit disbursements by China Eximbank for the
periods indicated, categorized by product type:
Actual Export Credit Disbursements by Product Type
Year Ended December 31,
2007
2008
2009
Amounts % of Total Amounts % of Total Amounts % of Total
(in millions of Rmb, except for percentages)
High-tech Products . .
Vessels . . . . . . . . . . .
Overseas Investments
Projects . . . . . . . . . .
General Electronic
Products . . . . . . . .
Equipment . . . . . . . .
Agricultural Products
Others . . . . . . . . . . .
.
.
.
.
.
.
.
.
46,392
23,207
23,527
22,852
31.4%
15.7
15.9
15.5
37,571
37,480
27,352
14,752
24.0%
24.0
17.5
9.4
53,614
53,998
36,930
21,397
25.2%
25.4
17.4
10.1
.
.
.
.
.
.
.
.
18,823
9,268
3,610
—
12.8
6.3
2.4
—
19,835
10,628
4,152
4,597
12.7
6.8
2.7
2.9
16,410
17,129
5,557
7,494
7.7
8.1
2.6
3.5
Total . . . . . . . . . . . . .
147,678
100.0%
156,366
100.0%
212,529
100.0%
The aggregate outstanding loans to the top 10 largest borrowers amounted to Rmb 94.3 billion, which
accounted for approximately 15.7% of China Eximbank’s total export credits as of December 31, 2009.
Sellers’ Credits. China Eximbank extends sellers’ credits to PRC exporters, as principal obligors, to
finance the production and export of PRC capital goods and technical services. China Eximbank has also
used this type of export credits to support investment and construction projects undertaken by PRC entities
overseas. As of December 31, 2009, China Eximbank had an aggregate principal amount of Rmb 281.5
billion of sellers’ credits outstanding.
— 37 —
To be eligible for sellers’ credits provided by China Eximbank, each underlying export contract must
have a value in excess of US$1.0 million or equivalent in other currencies; the capital goods subject to
export must contain sufficient eligible PRC content as required by the applicable PRC laws and
regulations; and the cash down-payment by the foreign purchaser must generally be no less than 20% of
the total contract price for a shipbuilding contract and 15% for other capital goods. Typically, sellers’
credits are secured, among other things, by the payments receivable under the export contracts and by other
credit-enhancement arrangements, such as guarantees and security interests in real and other property in
China.
Sellers’ credits may be made in either Renminbi or foreign currencies or both, depending on payment
terms in the relevant export contracts. The foreign currency portion of sellers’ credits is available only for
financing the purchase and import of technology, components and raw materials necessary for the
production of the exports. The original maturities of sellers’ credits may range from one year to 10 years.
Loan agreements for sellers’ credits typically require repayment in the currency in which the loan was
denominated. Interest rates are determined by reference to the benchmark lending rates issued by People’s
Bank of China. China Eximbank extends a majority of its sellers’ credits at floating interest rates. As of
July 31, 2010, the sellers’ credits denominated in Renminbi with fixed interest rates constituted
approximately 18% of all of the sellers’ credits denominated in Renminbi and extended by China
Eximbank; the sellers’ credits denominated in foreign currencies with fixed interest rates constituted
approximately 33% of all of its sellers’ credits denominated in foreign currencies. As of the same date, the
annual interest rates of the sellers’ credits were between 3.51% and 5.76% for credits denominated in
Renminbi and between 0.9% and 5.9% for credits denominated in foreign currencies.
Buyers’ Credits. Buyers’ credits are extended by China Eximbank to foreign purchasers to finance
their purchase and import of PRC capital goods and technical services. Depending on the structure of the
export project, China Eximbank may lend directly to the foreign importer, or lend to a financial
intermediary in the country of the importer, which would on-lend to the foreign importer. As of December
31, 2009, China Eximbank had an aggregate principal amount of US$15.1 billion of buyers’ credits
outstanding.
To qualify for buyers’ credits, each underlying export contract must have a value in excess of US$2.0
million or equivalent in other currencies; the capital goods subject to export must contain sufficient
eligible PRC content in accordance with the applicable PRC laws and regulations; and the cash down
payment by the foreign purchaser must generally be no less than 20% of the total contract price for a
shipbuilding contract and 15% for other capital goods. Typically, buyers’ credits are secured, among other
things, by guarantees from reputable financial or governmental institutions located in the borrower’s
jurisdiction and are further backed by insurance policies against the borrower’s country risk.
Buyers’ credits are made in foreign currencies and are disbursed directly to the PRC exporter. The
original maturities of such credits are typically less than 15 years. Interest rates are determined by
reference to the Commercial Interest Reference Rates for the relevant foreign currency as provided by the
Organization for Economic Cooperation and Development, or OECD, in its Arrangement for Officially
Supported Export Credits. The OECD promulgates on a monthly basis interest rates and other terms with
respect to buyers’ credit lending by governmental and policy-oriented institutions of its member states.
China is not a member of the OECD.
Agricultural Export Credits. In line with the PRC governmental initiatives to support China’s
agricultural developments, China Eximbank started in 2006 to extend export credits to exporters of
agricultural products, including primary farm produce and processed farm products. As of December 31,
2009, China Eximbank had an aggregate principal amount of Rmb 5.7 billion of agricultural export credits
outstanding.
SME Export Credits. Also in line with the PRC governmental initiatives to support small and
medium-sized enterprises in China, China Eximbank began to experiment export credit supports in 2006
to small and medium-sized exporters. As of December 31, 2009, China Eximbank had an aggregate
principal amount of Rmb 87.6 billion of SME export credits outstanding.
— 38 —
Import Credit Operations
China Eximbank has recently begun to provide import credits for the import of capital equipment,
such as aircraft, and resource materials, such as iron ore and pulp. In October 2007, with the approvals of
the Ministry of Commerce, the Ministry of Finance, the National Development and Reform Commission
and the China Banking Regulatory Commission, China Eximbank became the only bank authorized to
provide credit financing for the government-encouraged imports.
During 2009, China Eximbank signed import credit agreements with an aggregate principal amount
of Rmb 115.1 billion. As of December 31, 2009, China Eximbank had an aggregate principal amount of
Rmb 131.2 billion of import credits outstanding.
PRC Government Concessional Loan Operations
Commencing in May 1995, the State Council authorized China Eximbank to act as the sole lending
bank in respect of the PRC central government’s concessional loans to borrowers in certain developing
countries. In such capacity, China Eximbank extends loans in its own name, acting as principal in respect
of the concessional loans.
China Eximbank’s concessional loan program is a part of the PRC government’s foreign aid program
and is subject to close coordination with the Ministry of Commerce. Under the program, China Eximbank
offers credits with concessional terms primarily to developing countries selected by the PRC central
government. The objectives of the loan program are to promote economic and social development in the
recipient countries and to enhance economic cooperation between China and other developing countries.
These concessional loans are mainly used to finance infrastructure projects, manufacturing projects and
public welfare projects such as hospitals, schools and stadiums to promote economic and social
developments based on the development priorities of the recipient countries. These concessional loans are
usually preceded by a framework agreement between the PRC government and the government of the
relevant recipient country. The PRC government is typically represented by the Ministry of Commerce in
the negotiation, execution and delivery of such framework agreements, which include the terms and
conditions of each concessional loan. Within the applicable framework agreement, China Eximbank enters
into concessional loan agreements with the borrowers in connection with specific projects. Borrowers in
the concessional loan program can be divided into three categories:
•
government of a recipient country, represented by a sovereign institution;
•
on-lending institutions, typically a bank in a recipient country, designated by the government
of such recipient country and satisfactory to China Eximbank; and
•
foreign enterprises.
Concessional loans, when made to the central government or a central government-sponsored
financial institution of the recipient country, are generally based on such borrower’s sovereign credit.
Concessional loans made directly to a foreign end-user must be supported by credit enhancement
arrangements satisfactory to China Eximbank. In general, concessional loans are made in Renminbi and
have a maturity of 10 years or longer. Despite China Eximbank’s role as principal with respect to
concessional loans, China Eximbank’s activities in this area are undertaken on behalf of the PRC
government.
China Eximbank generally funds its concessional loans from its own sources with the protection of
the concessional loan reserve fund financed by the PRC central government against any potential principal
loss. As of December 31, 2009, China Eximbank had Rmb 500.0 million in the reserve fund available to
be drawn on by China Eximbank for losses incurred on the principal of its concessional loans. The Ministry
of Finance has undertaken to make additional contribution to this reserve fund should the PRC central
government decide to expand such concessional loan operations conducted through China Eximbank. As
of that date, the aggregate outstanding principal amount of the concessional loans made by China
Eximbank was Rmb 29.39 billion involving 65 developing countries as recipients. China Eximbank has not
experienced any loss in principal over the years with respect to its concessional loan operations that has
— 39 —
required utilization of the reserve fund. In addition, the Ministry of Finance compensates China Eximbank
for any interest loss between the interest rates under the concessional loans and its cost of funds. The
Ministry of Finance also compensates China Eximbank for certain administrative expenses incurred on
such concessional loans.
Foreign Exchange Guarantee Operations
China Eximbank is authorized under the Special Decree to issue foreign exchange guarantees to
support export financings consistent with its export credit operations. Such guarantees include advance
payment guarantees, performance bonds, bid bonds, quality guarantees and others. China Eximbank’s
guarantee operations are similar to its export credit lending operations, with similar eligibility
requirements.
Similar to China Eximbank’s export credit lendings, its foreign exchange guarantees typically cover
80% to 85% of the contract price of the relevant PRC exports. Most of China Eximbank’s guarantees are
collateralized with counter-guarantees from the borrowers’ sponsors, local banks or affiliated companies
or with security interests in the borrowers’ real or other properties. As is the case with its export credits,
many of China Eximbank’s guarantees are secured with several of these collateral arrangements. However,
due to the diverse nature of the collaterals securing China Eximbank’s guarantee projects and the potential
lack of liquidity of such collateral, there can be no assurance that, in the event of foreclosure upon a credit,
China Eximbank would be able to recover, if at all, the full amount owed to it from the disposal of such
collaterals.
China Eximbank extends foreign exchange guarantees primarily in foreign currencies. All
outstanding guarantees issued by China Eximbank have original terms of less than 10 years.
The following table sets forth the aggregate amount of guarantees issued by China Eximbank
outstanding as of the dates indicated:
Outstanding Guarantees
As of December 31,
2007
2008
2009
(in millions of US$)
Outstanding Guarantees . . . . . . . . . . . . . . . .
15,746.2
19,160.5
21,700.0
The following table sets forth the types of guarantees, as percentages of the total number of foreign
exchange guarantees, issued by China Eximbank during the periods indicated:
Types of Guarantees
Year Ended December 31,
2007
2008
2009
(in percentages)
Advance Payment Guarantees
Performance Bonds . . . . . . . .
Bid Bonds . . . . . . . . . . . . . .
Quality Guarantees . . . . . . . .
Others . . . . . . . . . . . . . . . . .
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— 40 —
90.8
4.2
0.8
0.5
3.7
81.9
7.6
1.4
0.2
8.9
82.5
12.1
1.3
0.3
3.8
100.0
100.0
100.0
Foreign Government Credit On-lending Operations
In 1995, China Eximbank was designated by the PRC central government as its principal on-lending
agent for loans made available to the PRC central government by foreign governments through their
financial institutions. China Eximbank on-lends such loans to PRC end-users. These foreign sovereign
loans support projects in transportation, municipal construction, electricity generation, industry,
agriculture, postal and telecommunications and other sectors. Borrowers of these foreign loans are largely
PRC central or provincial governmental agencies or borrowers guaranteed by PRC central or provincial
governmental agencies, although there also have been non-government-affiliated on-lending borrowers.
The outstanding credits China Eximbank on-lent to PRC end-users as of December 31, 2009 were from 23
foreign governments and six international financial institutions, including the Export-Import Bank of the
United States, Nordic Investment Bank, Nordic Development Fund, World Bank, European Investment
Bank, and Asian Development Bank. In connection with its on-lending and management activities for such
credits, China Eximbank is entitled to a fee payable by the borrower in the form of a commission. To the
extent that the on-lending borrowers are PRC central or provincial governmental agencies or otherwise
guaranteed by PRC central or provincial governmental agencies, China Eximbank will not consolidate such
on-lending operations into its consolidated financial statements and will account for them on an
off-balance sheet basis, although it consolidates the results of such on-lending operations in its profit and
loss statements. See “Financial Accounting Matters — Report of General Manager (Accounting
Department) — Note VII. Balance Sheet of On-lending Loans of Foreign Governments” beginning on page
F-28 in this offering circular. To the extent that the on-lending borrowers are not PRC central or provincial
governmental agencies or otherwise guaranteed by PRC central or provincial governmental agencies,
China Eximbank will have the right to assess the projects independently, bear the risks in such on-lending
operations, and has the final repayment liabilities pursuant to the on-lending agency arrangements with the
Ministry of Finance. China Eximbank consolidates its on-lending business operations with respect to the
projects that are not directly undertaken or otherwise guaranteed by PRC central or provincial
governmental agencies.
Foreign governmental credits to the PRC central government are generally made pursuant to the
terms of credit facilities negotiated by PRC central government departments, such as the Ministry of
Finance, each on behalf of the PRC central government. The direct borrower under such credit facilities
is typically the Ministry of Finance, acting on behalf of the PRC central government, although the end-user
of each credit or credit facility is typically a local enterprise or local governmental agency in China. As
the principal on-lending agent for foreign governmental credits, China Eximbank assists the PRC central
government in administering and monitoring the use of proceeds and development of the relevant projects,
in disbursing the credit proceeds to the end-users, collecting payments of principal and interest from the
end-users, and making the necessary payments to the foreign governmental lenders on behalf of the PRC
central government. Rights and obligations of the PRC central government, as the re-lender, and a PRC
end-user, as the borrower, for an on-lent credit are usually set forth in a sub-credit or on-lending
agreement, which provides for the rights and obligations of the PRC end-user similar to those of the PRC
central government as borrower under the foreign governmental credit agreement. The sub-credit or
on-lending agreement also contains provisions relating to the rights and duties of China Eximbank as the
on-lending agent of the re-lender.
To the extent that the borrowers of the on-lent foreign loans are PRC central or provincial
governmental agencies or borrowers guaranteed by PRC central or provincial governmental agencies,
China Eximbank is subject to limited credit risk as an on-lending agent of the PRC central government as
the PRC central government remains the obligor under these foreign government credit facilities. In
accordance with the agency arrangements between China Eximbank and the Ministry of Finance, China
Eximbank is acting as an agent of the Ministry of Finance in administering these loans, including
informing the Ministry of Finance of any risk of non-payment China Eximbank has observed during its
administrative process. To support China Eximbank in such on-lending agency operations, the PRC
government has established an on-lending support fund that can be drawn on by China Eximbank to make
payments to the foreign governmental lenders on behalf of the PRC central government before full
collection of payments from such PRC end-users. As of December 31, 2008 and 2009, the on-lending
support fund available for use by China Eximbank was the equivalent of US$200.0 million. Although
China Eximbank as entrusted by the Ministry of Finance may be required under the agency arrangements
to make timely payments to the foreign governmental lenders pursuant to the terms of such foreign
— 41 —
government credit facilities, to the extent the on-lending support fund is not sufficient to make such
payments, the agency arrangements expressly provide that China Eximbank has no liability to pay any
principal, interest or foreign bank charges with respect to any such loan. In such cases, China Eximbank
generally fronts its payments on behalf of the PRC central government out of funds it collects from the
end-users pursuant to the on-lending agreements. Consequently, if an end-user fails to make its payments
in a timely manner under the on-lending agreement, to the extent the on-lending support fund is not
sufficient to make such payments, China Eximbank would usually use its own funds to make the necessary
payments, including any principal, interest and foreign bank changes, under the foreign governmental
credit agreement, subject to subsequent compensation by the Ministry of Finance. Over the years, in its
capacity as such on-lending agent, China Eximbank has been able to receive full reimbursement from the
Ministry of Finance with respect to its fronted funds, including funds from the on-lending support fund
used in each year by China Eximbank to make such payments. The Ministry of Finance typically finances
such compensation with funds derived from its fiscal budget debiting arrangements with the local
governments that sponsored the end-users or funds from other means. Where an event of default has
occurred and is continuing under an on-lending agreement, China Eximbank is entitled to enforce its
remedies on behalf of the PRC central government against the end-user. End-users of foreign governmental
credits, especially for large facilities, are typically backed by guarantees from the central or
provincial-level governmental agencies, while smaller facilities may be supported by other collateral
arrangements satisfactory to the PRC central government. To the extent of projects subject to China
Eximbank’s independent credit evaluation and discretion, China Eximbank will evaluate the credit support
and collateral arrangements to its satisfaction, as China Eximbank will bear the final repayment liabilities
for such on-lent loans pursuant to the on-lending agency arrangements with the Ministry of Finance.
As of December 31, 2009, based on framework agreements between the PRC central government and
foreign sovereign lenders, the aggregate outstanding principal amount of borrowings by the PRC central
government for which China Eximbank acted as the on-lending agent was US$21.8 billion.
International Settlement
China Eximbank provides international settlement services and corporate deposit services for its
clients pursuant to arrangements under its loan facilities. In 2007, 2008 and 2009, China Eximbank’s
international settlement and trade finance volume totaled US$21.2 billion, US$36.3 billion and US$41.9
billion, respectively.
Underwriting Business
In September 2007, with the approval of the People’s Bank of China, China Eximbank became a bank
authorized to underwrite debt securities of non-financial institutions in the PRC interbank market. In 2008,
China Eximbank participated in the underwriting of 14 debt issuances, with an aggregate principal amount
of approximately Rmb 1.93 billion, as lead underwriter, co-lead underwriter or underwriter. In 2009, China
Eximbank participated in the underwriting of 32 debt issuances, with an aggregate principal amount of
approximately Rmb 6.515 billion, as lead underwriter, co-lead underwriter or underwriter.
Credit Evaluation, Approval and Monitoring
China Eximbank has a credit management system that separates the decision-making process in credit
evaluation from that of credit approval and monitoring with respect to its lending activities and its credit
portfolio management, including, in each case, its guarantee programs. Before a credit or guarantee is
granted, the ultimate credit decision-making power at the bank headquarters level rests with the Credit
Approval Committee of China Eximbank. At each branch of China Eximbank, a project evaluation
committee at the branch is, however, able to make the pre-lending credit decision if it is within its scope
of authorization. After a credit or guarantee is extended, the ultimate decision-making power with respect
to a loan facility evaluation rests with the Risk Management & Compliance Committee of China
Eximbank. At the branch level, the post-lending evaluation is conducted by a risk management office. The
Credit Approval Committee is currently composed of a chairman, a vice chairman and other committee
members. The presence of two-thirds of the members of each Committee constitutes a quorum, and a
two-thirds majority of the members present may adopt resolutions for such Committee. For a diagram
showing China Eximbank’s organizational structure, see “Management” below.
— 42 —
Credit Evaluation
China Eximbank has guidelines on credit evaluation for its lendings and guarantees. When the credit
department at the bank headquarters receives an application for an export credit or a guarantee, such
application will be subject to a three-step evaluation procedure as currently in force:
•
preliminary evaluation by the relevant credit department, which will prepare a credit risk
appraisal and a project feasibility study;
•
further evaluation by the Evaluation Department; and
•
final evaluation by the Credit Approval Committee depending on the size of the credit project.
Credit applications at the branch level, to the extent within the authorization of the branches, are also
subject to a three-step evaluation procedure:
•
preliminary review by its business office;
•
further review by its evaluation division; and
•
final decision by the branch project evaluation committee.
China Eximbank uses a grading system in its credit evaluation. The major factors China Eximbank
takes into consideration before a credit is approved include:
•
eligible PRC content of the export products;
•
encouraged import products and overseas investments;
•
significance of the industry to the PRC national economy;
•
quality of the export products;
•
credit history and repayment capability of the borrower and its guarantors;
•
quality of any security and other credit enhancement to be provided; and
•
environmental impact assessment of the projects.
Approval Procedures
China Eximbank’s approval procedures have evolved over the years as its loan portfolios have grown
and branches have been established across China. Its current approval guidelines are as follows:
•
China Eximbank’s headquarters grant different levels of credit approval authorities to its
branches based on their performance, management and scope of business as assessed by the
headquarters. Credit applications that exceed the credit approval limits established for the
branches must be submitted to the headquarters for approval as described below.
•
Credit applications that must be approved by China Eximbank’s headquarters are submitted to
its evaluation department for initial review. Depending on the credit amount and category, such
credit applications are subject to further reviews by the relevant vice president or its project
evaluation committee.
Environmental Impact Assessment
Environmental impact is an aspect of China Eximbank’s credit evaluation process. As part of the
credit evaluation for lending within or outside China, borrowers must submit documentation to China
Eximbank to allow China Eximbank’s credit appraisal team to make a determination whether to approve
— 43 —
such financings. China Eximbank requires a credit project to be compliant with both local environmental
standards and China Eximbank’s internal guidelines on environmental compliance, which are based on
China’s environmental regulations. China’s environmental regulations may differ from environmental
regulations in other countries.
Under the Law on Environmental Impact Assessment effective September 1, 2003, companies
embarking on environmentally sensitive projects within China must submit environmental impact
assessment reports to the State Environmental Protection Administration at the relevant national,
provincial or local levels. In accordance with this law, the State Environmental Protection Administration
has published a catalog, which lists environmentally sensitive projects and specifies the requirements and
coverage of their environmental impact assessment reports. The catalog currently lists many industries
subject to this reporting requirement, including coal mining, oil and gas exploration and development, pulp
mill, petroleum refinery, chemical and petrochemical production, machinery and equipment
manufacturing, power generation and transmission, hydropower facilities, urban transportation
infrastructure, waste disposal facilities, railways, highways, dams, ports, and nuclear facilities. A project
company must engage an independent and qualified environmental appraiser to assess the environmental
impact and to prepare the report for submission to the PRC government. In addition, the law does not
permit any project listed in the catalog to begin construction until government regulators are satisfied with
the environmental impact assessment.
Monitoring of Credit Projects
China Eximbank’s 16 operational branches, one domestic representative office and three overseas
representative offices assist its head office in the overall operations within and outside China, especially
in monitoring its credit projects. These branches and representative offices are located in the vicinities of
most of China Eximbank’s credit projects. They participate in collection of payments, gathering of
information, updating project profiles and monitoring the developments at project sites.
As a part of China Eximbank’s efforts to enhance its credit assets quality management and to
standardize its risk control procedures, with effect from January 1, 2004, China Eximbank implements a
risk-based asset classification scheme formulated by the China Banking Regulatory Commission for
commercial banks in China. This risk-based asset classification separates China Eximbank’ credit assets
into five classes:
•
a credit is classified as “normal” where the borrower continues to fulfill its obligations to repay
on a timely basis both principal and interest;
•
a credit is classified as “watch” or “special mention” if China Eximbank becomes aware of
factors which it believes may negatively impact the borrower’s ability to repay the credit;
•
a credit is classified as “substandard” where the borrower has failed to repay either principal
or interest on a timely basis and it has become apparent to China Eximbank that the borrower
is unable to rely on its revenues from operations to satisfy its repayment obligations;
•
a credit is classified as “doubtful” where the borrower has failed to repay either principal or
interest on a timely basis and China Eximbank anticipates incurring losses even after taking
steps to enforce its rights in relation to any pledged or mortgaged assets securing the credit; and
•
a credit is classified as “bad” or “loss” where China Eximbank believes that the recovery of all
outstanding principal and interest is not possible and that only a very limited recovery is
possible after all measures available to China Eximbank have been exhausted and all legal
proceedings reasonably available to China Eximbank have been pursued.
China Eximbank has established a system of risk surveillance over its loan portfolios to maintain a
close watch over possible irregularities and uncertainties.
— 44 —
Agency Banking Relationships
As of December 31, 2009, China Eximbank established agency relationships with 1,099 branches of
over 500 domestic and foreign banks in 152 countries and regions around the world. These agency banks
participate in China Eximbank’s international settlement and loan operations.
Over-due Principal and Interest; Investments
Overdue Principal. For provisioning and accounting purposes, China Eximbank treats
“sub-standard,” “doubtful” and “bad” loans as non-performing loans pursuant to the five-category
risk-based asset classification scheme formulated by the China Banking Regulatory Commission. See “—
Credit Evaluation, Approval and Monitoring — Monitoring of credit projects” above. For monitoring
purposes, China Eximbank further divides the five categories of risk-based assets into 12 grades, with five
further grades within the “normal” classification, three within the “watch” classification, two within the
“substandard” classification.
China Eximbank reports the condition of its loan assets to the China Banking Regulatory
Commission on an annual and quarterly basis. Because the aggregate loan portfolio of China Eximbank on
its balance sheet also contains loan projects selected and designated by the PRC government, pursuant to
the requirements of the China Banking Regulatory Commission, China Eximbank reports the condition of
its own portfolio only and not the portfolio selected and designated by the PRC government. As of the
year-end of 2008 and 2009, China Eximbank had non-performing loans (comprising all sub-standard,
doubtful and bad loans) of approximately Rmb 6.88 billion and Rmb 6.64 billion, respectively,
representing approximately 1.52% and 1.10%, respectively, of its outstanding loan portfolio, each
calculated on an on-balance-sheet basis, as of the relevant year-end.
Loan Loss Reserve. China Eximbank maintains a loan loss reserve against potential defaults in the
payment of loan principal and interest on the basis of evaluations conducted by China Eximbank on its loan
assets included in its consolidated balance sheet. Off-balance-sheet loan assets, primarily foreign
governmental loans on-lent by China Eximbank to PRC central or provincial governmental agencies or
borrowers guaranteed by PRC central or provincial governmental agencies, are not included in such
evaluations or in the calculation of such loan loss reserves. In accordance with the agency arrangements
between China Eximbank and the Ministry of Finance, China Eximbank has no liability for the payment
of any principal, interest or foreign banking charges with respect to any such loan project undertaken by
PRC central or provincial governmental agencies or otherwise guaranteed by PRC central or provincial
governmental agencies.
China Eximbank conducts its loan loss reserve related evaluations in two ways: a portfolio based
evaluation and a specific loan based evaluation. Portfolio evaluations are regularly performed by the risk
management department at the headquarters of China Eximbank on a rolling basis, with risk weights
assigned to the loan portfolios within the “normal” and “watch” categories. Specific loan asset evaluations
are regularly performed by the various lending departments and branches, subject to the review by the risk
management department at the headquarters of China Eximbank, with risk weights assigned to each such
loan asset within the “normal” and “watch” categories. The portfolio evaluation and the specific loan
evaluation do not apply to the PRC government concessional loan operations conducted by China
Eximbank, which are evaluated pursuant to the five-category risk-based asset classification scheme
formulated by the China Banking Regulatory Commission as disclosed in “— Credit Evaluation, Approval
and Monitoring — Monitoring of credit projects” above. As of December 31, 2008 and 2009, China
Eximbank had a loan loss reserve of approximately Rmb 8.14 billion and Rmb 8.94 billion, respectively.
Investments. From time to time, China Eximbank invests in debt securities that it considers of high
quality as a part of its treasury management operations. Such debt securities include mid- to long-term U.S.
treasury bonds, debt securities issued by large banks and financial institutions in Europe and the United
States with strong credit ratings, and short-term commercial paper issued by overseas branches of PRC
commercial banks.
As of July 31, 2008, China Eximbank held an aggregate principal amount of approximately US$325.0
million of debt securities issued by Federal National Mortgage Association, or Fannie Mae, and Federal
Home Loan Mortgage Corporation, or Freddie Mac. The significant dislocations and turbulences in the
— 45 —
global credit markets since the second half of 2007 caused significant concerns with respect to the financial
health of these two federally chartered housing enterprises, despite the rescue plans formulated by the U.S.
government for Fannie Mae and Freddie Mac. China Eximbank disposed of all the debt securities of Fannie
Mae and Freddie Mac in the third quarter of 2008.
China Eximbank does not hold any debt securities issued by any financial institution in any country
in Europe that experienced sovereign debt crisis in early 2010.
For purposes of risk management, China Eximbank recorded provisions for impairment of
investments in debt securities denominated in foreign currencies in an aggregated amount of US$116
million as of December 31, 2009 and further increased such provisions to US$117 million as of June 30,
2010.
Sources of Funds
In addition to capital contribution by the PRC government and fiscal subsidies from the Ministry of
Finance, China Eximbank may obtain funds from a variety of sources, such as the issuance of
Renminbi-denominated and foreign currency-denominated debt securities in the domestic and international
capital markets, short-term loans provided by the People’s Bank of China, and borrowings from domestic
and international financial institutions.
Funding of Renminbi Loans. Sources of funding available to China Eximbank for its Renminbi
credits include capital contributed by the Ministry of Finance, issuance of Renminbi-denominated debt
securities, borrowings from domestic financial institutions and short-term loans from the People’s Bank of
China.
The following table sets forth the amounts of Renminbi funds obtained by China Eximbank from each
of its principal sources of funding during the periods indicated:
Sources of Funds for Renminbi Credits
Year Ended December 31,
2007
2008
2009
Amounts % of Total Amounts % of Total Amounts % of Total
(in millions of Rmb, except for percentages)
Capital Contributed by
Ministry of Finance . .
2,423.7
Rmb Bonds issue in
Hong Kong SAR . . . .
2,000.0
Domestic Financial
Debentures . . . . . . . . 220,500.0
Total . . . . . . . . . . . . . . 224,923.7
1.1%
2,423.7
0.8%
2,423.7
0.5%
0.9
5,000.0
1.5
4,000.0
0.9
98.0
315,870.0
97.7
438,330.0
98.6
100.0% 323,293.7
100.0% 444,753.7
100.0%
During the three years ended December 31, 2009, the domestic financial debentures that China
Eximbank issued had maturities of three months to ten years. All of its financial debentures with
three-month, six-month and nine-month maturities were discounted debt securities and had referenced
yields between 1.1232% and 4.0916%. A majority of its one-year to ten-year financial debentures were
fixed rate debt securities and had fixed interest rates between 1.56% and 4.82%.
China Eximbank’s primary source of funds denominated in Renminbi has been the issuance of
financial debentures to domestic banking and financial institutions. Interest rates and maturities for
domestic financial debentures are determined by the market forces. Each year, China Eximbank proposes
to the People’s Bank of China a funding plan for the following year and seeks its approval of the proposal.
The People’s Bank of China reviews this proposal based upon the PRC economic and industrial plans for
such year. Since October 1998, China Eximbank has been issuing, through auctions in the domestic
interbank markets, its Renminbi-denominated financial debentures.
— 46 —
Pursuant to the Special Decree, China Eximbank may also borrow short-term loans from the People’s
Bank of China. See “— Relationship with the PRC Government — Government Support” in this offering
circular. China Eximbank may borrow such short-term People’s Bank of China loans to cover cash flow
needs prior to the availability of long-term financing. China Eximbank had no short-term People’s Bank
of China loans outstanding at the year-end of 2007, 2008 and 2009.
Funding of Foreign Currency Loans. China Eximbank relies on the following sources of funding
for its credits denominated in foreign currencies: (i) capital denominated in foreign currency contributed
by the Ministry of Finance; (ii) the issuance of debt securities denominated in foreign currencies; and (iii)
foreign currency loans obtained from foreign and domestic commercial banks, including short-term credits
from the domestic foreign exchange interbank markets. Foreign currency borrowings overseas of one-year
maturity or longer are subject to the approval of the National Development and Reform Commission on
a case-by-case basis. Short-term foreign currency borrowings overseas are subject to an annual quota
approved by the State Administration of Foreign Exchange.
The following table sets forth the amounts of foreign currency funds obtained by China Eximbank
from each of its principal sources of funding during the periods indicated:
Sources of Funds for Foreign Currency Credits
Year Ended December 31,
2007
2008
2009
Amounts % of Total Amounts % of Total Amounts % of Total(1)
(in millions of US$, except for percentages)
Capital Contributed
by Ministry of
Finance . . . . . . . .
International Bonds .
Syndicated Bank
Loans . . . . . . . . .
Domestic Bonds. . . .
Interbank Short-term
Borrowings . . . . .
Other Loans . . . . . .
.
.
310.2
2,000.0
4.2%
26.8
310.2
2,000.0
1.8%
11.4
310.2
2,000.0
1.3%
8.2
.
.
1,760.0
1,200.0
23.6
16.1
1,760.0
1,200.0
10.1
6.9
1,000.0
1,200.0
4.1
4.9
.
.
185.1
2,000.0
2.5
26.8
—
12,200.0
—
69.8
3,980.0
15,800.0
16.4
65.0
Total . . . . . . . . . . . . .
7,455.3
100.0% 17,470.2
100.0% 24,290.2
100.0%
Funding of Concessional Loans. China Eximbank relies on funds sourced from its available
channels, such as its debenture offerings in China, to fund its concessional loan program. To protect China
Eximbank against loan losses as a result of its concessional loan operations, the PRC government has
established a concessional loan reserve fund for the exclusive use of China Eximbank. China Eximbank
may charge any such loan loss to this fund. As of December 31, 2009, the concessional loan reserve fund
had a balance of Rmb 500.0 million. The PRC government has also undertaken to compensate China
Eximbank for any losses it incurred in its concessional loan activities in excess of such reserve fund.
Market Risk Management
China Eximbank’s market risk exposures primarily consist of fluctuations in exchange rates and
interest rates. Other than currency and interest rate hedge transactions necessary to manage its risk
portfolio, China Eximbank does not engage in speculative trading activities.
Currency Risk. Under the current foreign exchange control system in China, China Eximbank may
undertake current account foreign exchange transactions without prior approval from the State
Administration for Foreign Exchange. Foreign exchange transactions under the capital account are subject
— 47 —
to the registration requirements of the State Administration for Foreign Exchange. China Eximbank
primarily relies on currency matching between its borrowings and lendings to minimize its currency
exposure, with foreign exchange swaps, from time to time, to hedge exchange rate fluctuations between
Renminbi and foreign currencies.
Interest Rate Risk. China Eximbank is exposed to interest rate risks arising from its borrowings as
well as mismatches between its credit assets and liabilities. China Eximbank uses interest rate swaps, from
time to time, to adjust its interest rate exposure, based on existing and anticipated market conditions. China
Eximbank invests its foreign currency funds, before their disbursement to intended projects, in treasuries
of the U.S. and PRC governments and other investment grade debt securities.
Debt Repayment Record
China Eximbank has never defaulted in the repayment of principal of or interest on any of its
obligations.
Employees
At December 31, 2009, China Eximbank had approximately 1,503 full-time employees.
Properties
The head office of China Eximbank is located at No. 30 Fuxingmennei Street, Xicheng District,
Beijing 100031, China. In addition to the head office, China Eximbank maintains offices located in
premises owned or leased by China Eximbank.
— 48 —
MANAGEMENT
The operations of China Eximbank are currently managed by a president, five vice presidents, a
secretary of disciplinary committee and two assistant presidents under the leadership of a board of
directors. The president functions as the chief executive of China Eximbank, and the vice presidents,
secretary of disciplinary committee and assistant presidents, who are each responsible for different areas
of China Eximbank’s operations, assist the president in the operation and administration of China
Eximbank. The board of directors is the ultimate policy-making body within China Eximbank.
The Special Decree also provides for the establishment of functional departments within China
Eximbank, under the leadership of the president. Responsibility for certain functional departments is
allocated to the vice presidents and assistant presidents, acting under the overall authority of the president.
The organization of China Eximbank is as follows:
Board of Directors
Board of Supervisors
Strategy Committee
Chairman & President
Auditing & Supervising
Committee
Departments at Head Office
Business Branches
Executive Office
Risk Management Dept.
Beijing Branch
Credit Approval
Committee
Human Resources Dept.
Evaluation Dept.
Shanghai Branch
Risk Management &
Internal Control Committee
Supervision Office
Internal Control & Compliance Dept.
Shenzhen Branch
Assets & Liabilities
Management Committee
Economic Research Dept.
Auditing Dept.
Nanjing Branch
Business Development &
Innovation Committee
Business Development & Innovation Dept.
Accounting Dept.
Dalian Branch
Corporate Business Dept.
Legal Affairs Dept.
Chengdu Branch
Transport Financing Dept.
International Business Dept.
Qingdao Branch
Special Account Financing Dept.
Information & Technology Dept.
Zhejiang Branch
Concessional Loan Dept.
Software Development Dept.
Hunan Branch
On-lending Dept.
Party & League Affairs Dept.
Chongqing Branch
Planning & Financial Management Dept.
Workers Union
Shaanxi Branch
Treasury Dept.
Administrative Dept.
Hubei Branch
Information &
Technology Committee
Heilongjiang Branch
Guangdong Branch
Yunnan Branch
Ningbo Branch
Representative Offices
Fuzhou Rep. Office
Rep. Office for Southern
and Eastern Africa
St. Petersburg Rep. Office
— 49 —
Paris Rep. Office
Board of Directors. The Special Decree provides that the main functions of the board of directors
include: examining and determining China Eximbank’s long-term and medium-term development
programs, operations and annual plans in accordance with the industrial and foreign trade policies of
China; examining China Eximbank’s budget, consolidated financial statements and after-tax profit
distribution scheme; and considering and deciding important issues concerning national policies on export
credits and export credit guarantees and credit risks. The board of directors reports to the State Council.
The Special Decree provides that the membership of the board of directors shall consist of the
president and vice presidents of China Eximbank and representatives from various government agencies,
including the National Development and Reform Commission, the Ministry of Finance, the Ministry of
Commerce, the People’s Bank of China and other central government agencies. The president of China
Eximbank is also the chairman of the board of directors.
Board of Supervisors. Since early 2000, the State Council designated financial institution
supervisors for every major state-owned financial institution. The board of supervisors conducts a daily
on-site supervision at China Eximbank pursuant to mandates and directions of the State Council.
President, Vice Presidents, Secretary of Disciplinary Committee and Assistant Presidents. China
Eximbank’s articles of association assign to the president overall responsibility for the management of
China Eximbank under the leadership of the board of directors. The articles of association set forth the
following major responsibilities of the president:
•
managing the overall operations of China Eximbank;
•
implementing the resolutions of the board of directors;
•
overseeing the formation of China Eximbank’s development programs, management policies
and annual business plans;
•
overseeing the formulation of China Eximbank’s budget, consolidated financial statements and
after-tax profit distribution plans;
•
overseeing the development of China Eximbank’s policies and procedures on personnel
management and financial management;
•
developing methods to streamline China Eximbank’s organizational structure; and
•
performing other duties delegated by the board of directors.
Pursuant to China Eximbank’s articles of association, the president and the vice presidents of China
Eximbank are appointed by the State Council. The president and vice presidents serve without fixed terms.
The present president, vice presidents, secretary of disciplinary committee and assistant presidents
are as follows:
Mr. Li Ruogu, President. Mr. Li was appointed as the President and Chairman of the board of
directors of China Eximbank by the State Council in June 2005 and assumed his office in July 2005. Prior
to this appointment, Mr. Li was Assistant Governor and Deputy Governor of the People’s Bank of China
(2000-2005). During 2000 to 2005, Mr. Li also served as Alternate Governor of International Monetary
Fund (IMF) for China, Alternate Governor of the African Development Bank (AfDB) for China, Alternate
Governor of Caribbean Development Bank (CDB) for China and Alternate Governor of Eastern and
Southern African Trade and Development Bank (PTA Bank) for China. He served as Director General of
International Department of the People’s Bank of China (1999-2000); Executive Director for China,
Chairman of the Budget Committee and Member of the Inspection Committee of Asian Development Bank
(ADB) (1995-1999); Economist of Asia and Pacific Department of International Monetary Fund
(1990-1991); Deputy Division Director, Division Director, Deputy Director General, Acting Director
General, Director General of Foreign Affairs Department of International Financial Organization
Department, International Department of the People’s Bank of China, Secretary General of the PRC
government delegations for the IMF, the ADB and the AfDB meetings and Interim Committee meetings,
— 50 —
Temporary Alternate Governor during IMF, ADB and AfDB annual meetings, and Head of missions
representing China in various international conferences and meetings (1985-1995); and Assistant Professor
of Beijing University (1984-1985). Mr. Li received a Master of Arts degree from Beijing University in
1981 and a Master of Public Administration degree from Princeton University in 1983.
Mr. Su Zhong, Vice President. Mr. Su was appointed as a Vice President by the State Council in
2003. Prior to this appointment, Mr. Su served as Assistant President of China Eximbank (2001-2003) and
General Manager of General Planning Department of China Eximbank (1998-2001). Mr. Su graduated
from Tsinghua University in 1982.
Mr. Zhu Hongjie, Vice President. Mr. Zhu was appointed as a Vice President by the State Council
in November 2001. Prior to this appointment, Mr. Zhu served as Assistant President of China Eximbank
(2001), General Manager of the Sellers’ Credit Department of China Eximbank (2000-2001), General
Manager of the Concessional Loan Department of China Eximbank (1998-2000) and General Manager of
the Planning & Treasury Department of China Eximbank (1994-1998). Mr. Zhu graduated from Xiamen
University in 1982.
Mr. Li Jun, Vice President. Mr. Li was appointed as a Vice President by the State Council in
September 2004. Prior to this appointment, Mr. Li served as President of Shanghai Branch of China
Eximbank (2001-2004) and Commissioner of Nanjing Auditing Office of Industrial and Commercial Bank
of China (2000-2001) and Vice President of Jiangsu Branch of Industrial and Commercial Bank of China.
Mr. Li received an undergraduate degree and an MBA degree.
Mr. Liu Liange, Vice President. Mr. Liu was appointed as a Vice President by the State Council in
March 2007. Prior to this appointment, Mr. Liu served as Director General of Anti-Money Laundering
Bureau (Security Bureau) of the People’s Bank of China (2005-2006), Manager of the People’s Bank of
China Fuzhou Central Sub-Branch and Director General of the Fujian Branch of the State Administration
of Foreign Exchange (2004-2005), Deputy Director General of International Department of the People’s
Bank of China (2000-2004), Chief Representative of the People’s Bank of China Representative Office
(London) for Europe (1999-2000), Deputy Managing Director of China’s Office in Asian Development
Bank (1996-1999). Mr. Liu received an undergraduate degree in economics in 1982 and a master’s degree
in economics from People’s Bank of China Graduate School in 1987.
Mr. Zhu Xinqiang, Vice President. Mr. Zhu was appointed as a Vice President in March 2009. Prior
to this appointment, Mr. Zhu served as Assistant President of China Eximbank (2007-2009), Assistant
Governor of Bank of China (2003-2007), General Manager of Treasury Department and Global Markets
Department of Bank of China (1999-2003), Deputy General Manager of Treasury Department of Bank of
China (1996-1999) and Deputy General Manager and Treasurer of Sydney Branch of Bank of China
(1989-1996). Mr. Zhu graduated from Jilin University in 1977 and studied at John F. Kennedy School of
Government of Harvard University in 2001.
Mr. Gong Jie, Secretary of Disciplinary Committee. Mr. Gong was appointed as the Chief
Disciplinary Officer in March 2009. Prior to this appointment, Mr. Gong served as the Deputy
Commissioner of Discipline Inspection and Director General of the Supervisory Board Office of the China
Banking Regulatory Commission (2003-2009); and Deputy Head of the Financial Working Committee of
the CPC Central Commission for Discipline Inspection and Deputy Chief Disciplinary Officer of the
People’s Bank of China (2002-2003). Mr. Gong received a master’s degree from the CPC Central Party
School.
Mr. Sun Ping, Assistant President. Mr. Sun was appointed as an Assistant President in September
2009. Prior to this appointment, Mr. Sun served as Director General of the Executive Office and Director
General of the CPC Committee Office of China Eximbank (2005-2009); Deputy Secretary of the CPC
Committee, Chief Disciplinary Officer and Vice President of China Eximbank’s Shanghai branch, and
Secretary of the CPC Committee and President of China Eximbank’s Nanjing branch (2001-2005); and
Deputy General Manager of Credit Business Department I, and Deputy General Manager and General
Manager of Sellers’ Credit Department II of China Eximbank (1998-2001). Mr. Sun received a master’s
degree in economics.
— 51 —
Mr. Yuan Xingyong, Assistant President. Mr. Yuan was appointed as an Assistant President in
September 2009. Prior to this appointment, Mr. Yuan served as General Manager of the Human Resources
Department and Director General of the Organization Department of the CPC Committee of China
Eximbank (2006-2009); and Director General of the Economic and Technological Cooperation Department
of the State Council Three Gorges Office (2002-2006). Mr. Yuan received a bachelor’s degree in literature.
— 52 —
DESCRIPTION OF THE BONDS
The following description summarizes the provisions of the bonds in individual certificated form and
the fiscal agency agreement. This summary does not purport to be complete and are subject to, and is
qualified in its entirety by reference to, all provisions of the bonds and the fiscal agency agreement,
including the definitions therein of certain terms. You should refer to the section entitled “Terms and
Conditions of the Bonds” beginning on page A-1 in this offering circular for the terms and conditions of
the bonds.
You should refer to the section entitled “Summary of Provisions Relating to the Bonds in Global
Form” for additional information when you invest in the bonds represented by a global bond. Each of the
fiscal agent, paying agent and China Eximbank will treat the CMU operator as the bondholder for all
purposes under the terms and conditions of the bonds when they are represented by a global bond.
The Securities and Futures Commission takes no responsibility for the contents of this section. The
Securities and Futures Commission’s authorization of this offering circular does not imply the Securities
and Futures Commission’s endorsement or recommendation of the terms and conditions of the bonds as set
out herein.
General
The Renminbi 2.65% bonds due 2013 are to be issued under a fiscal agency agreement, to be dated
on or around November 26, 2010, between China Eximbank and Bank of China (Hong Kong) Limited, as
fiscal agent. China Eximbank will issue the bonds in an aggregate principal amount of up to Rmb
5,000,000,000 (which includes the offering of the bonds to retail investors and the offering of the bonds
and other debt securities to institutional and other investors). The bonds:
•
will be in bearer form in the denomination of Rmb 10,000, each with coupons for interest
attached;
•
will bear interest at 2.65% per year from December 2, 2010 until December 2, 2013;
•
will pay interest semi-annually in arrear, calculated on the basis of a 365-day year and the
actual number of days in the semi-annual period, on June 2 and December 2 of each year,
beginning on June 2, 2011 until December 2, 2013 to the bearer of each coupon;
•
upon issuance, will constitute direct, general, unconditional, unsecured and unsubordinated
obligations of China Eximbank and will rank equally with each other and with all other general,
unsecured and unsubordinated public external indebtedness of China Eximbank from time to
time outstanding;
•
will not be subject to redemption by China Eximbank or any bondholder prior to maturity;
•
will be redeemed at par upon maturity on the interest payment date falling on or nearest to
December 2, 2013;
•
will be transferred in book-entry form through CMU operated by HKMA, or the CMU operator,
and direct and indirect CMU participants, including each placing bank;
•
will be transferred in nominal principal amount of Rmb 10,000 or multiples of Rmb 10,000;
•
will be available in individual definitive form only under certain limited circumstances; and
•
will not have the benefit of any sinking fund for the amortization and retirement of the bonds.
Title to the bonds will pass by delivery. The holder of any bond or coupon will (except as otherwise
required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and
regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice
of any previous loss or theft thereof) and no person will be liable for so treating such holder.
— 53 —
Despite the above description, you should note, however, that definitive bonds, or bearer bonds in
individual definitive form, will not be issued to you, as an individual investor in the bonds, except in very
limited circumstances described in “— Definitive Bonds” below. One global bond, representing the
aggregate principal amount of the bonds, will instead be deposited on the issue date of the bonds with a
sub-custodian of CMU, or the CMU operator. As long as the CMU operator is the holder of the global bond,
it will be considered the absolute owner of such global bond for all purposes under the fiscal agency
agreement. The CMU operator can act only on behalf of CMU participants, who in turn may act on behalf
of persons who hold interests through them. Bonds, in the form of interests in the global bond, will be
credited to the accounts of CMU participants with CMU. Your interests in the global bond will only be
shown on, and transfers of your interests will only be effected through, records maintained by a direct or
indirect CMU participant, which, in your case, should be your placing bank.
Payment of Principal and Interest
China Eximbank will make payments of principal and interest on the bonds in Renminbi on any
interest payment date or at maturity. Principal of and interest on the bonds will be payable at the offices
or agencies that China Eximbank maintains for such purpose, which initially will be the offices of the
paying agents specified in the inside back cover of this offering circular. The payments will be made
available by China Eximbank to the fiscal agent on such interest payment date or maturity date. If any date
for payment in respect of the bonds is not a business day, you will not be entitled to payment until the next
business day unless the next business day would thereby fall into the next calendar month in which event
it shall be brought forward to the immediately preceding business day. “Business day” means a day, other
than a Saturday or Sunday, on which commercial banks in Hong Kong SAR are open and settle Renminbi
payments and banks in Beijing, China, are not authorized or obligated by law or executive order to be
closed. China Eximbank will calculate the amount of interest payable on its bonds by counting the actual
number of calendar days in the interest period assuming a year of 365 days. So long as the bonds are in
global form deposited with the CMU operator, the fiscal agent will make such payments to the persons for
whose account a relevant interest in the global bond is credited as being held by the CMU operator at the
relevant time, as notified to the fiscal agent by the CMU operator in a relevant CMU instrument position
report (as defined in the rules of CMU) or in any other relevant notification by the CMU operator. Such
payment will discharge the obligations of China Eximbank in respect of that payment. Any payments by
the CMU participants to indirect participants will be governed by arrangements agreed between the CMU
participants and the indirect participants and will continue to depend on the inter-bank clearing system and
traditional payment methods. Such payments will be the sole responsibility of such CMU participants.
Payments, transfers, exchanges and other matters relating to interests in the global bond may be
subject to various policies and procedures adopted by the CMU operator from time to time. None of the
China Eximbank, the Joint Lead Managers, the fiscal agent or any of their agents will have any
responsibility or liability for any aspect of the CMU operator’s records relating to, or for payments made
on account of, interests in the global bond, or for maintaining, supervising or reviewing any records
relating to such interests.
If any bonds are no longer represented by a global bond, payment on the bonds in individual
definitive form may, at China Eximbank’s option, be made by cheque drawn directly in favor of the
bondholders or couponholders upon presentment of the bonds in individual definitive form or the coupons
for payment of principal and interest, as the case may be.
Further Issues
China Eximbank may from time to time, without the consent of bondholders, create and issue further
bonds having the same terms and conditions as the bonds in all respects, except for the issue date, issue
price and the first payment of interest thereon. Additional bonds issued in this manner will be consolidated
with and will form a single series with the bonds.
Status of the Bonds
The bonds will be direct, unconditional, unsecured and unsubordinated obligations of China
Eximbank. The bonds will rank pari passu without any preference among themselves (whether by reason
of priority of date of issue or otherwise) and at least equally with all other unsecured and unsubordinated
— 54 —
Public External Indebtedness of China Eximbank from time to time outstanding except those which are
mandatorily preferred by operation of law. For the definition of the Public External Indebtedness, see “—
Negative Pledge” below. As of December 31, 2009, the principal amount of Public External Indebtedness
of China Eximbank that would rank pari passu with the bonds was approximately US$2.6 billion. As of
December 31, 2009, the principal amount of all borrowings by China Eximbank from overseas, including
such Public External Indebtedness, was approximately US$2.6 billion. The bonds also enjoy equal
liquidation preference with all general, unsecured and unsubordinated indebtedness of China Eximbank.
Negative Pledge
So long as any of the bonds remains outstanding, China Eximbank will not grant or permit to be
outstanding any mortgage, charge, lien, pledge or any other security interest on any of its present or future
assets or revenues to secure the payment of, or any guarantee or indemnity in respect of, any Public
External Indebtedness unless such bonds are secured by such security interest equally and ratably with
such other Public External Indebtedness. This provision, however, will not apply to:
•
any security interest on any property or asset existing at the time of acquisition thereof or to
secure the payment of all or any part of the purchase price or construction cost thereof or to
secure any indebtedness incurred prior to, or at the time of, such acquisition or the completion
of construction of such property or asset for the purpose of financing all or any part of the
purchase price or construction cost thereof;
•
any security interest in existence on December 2, 2010 to the extent that it secures Public
External Indebtedness outstanding on such date; or
•
any lien arising by operation of law.
Any bond authenticated and delivered pursuant to the fiscal agency agreement, as of any date of
determination of outstanding bonds, will be deemed “outstanding” except:
•
bonds that have been cancelled by the fiscal agent or delivered to the fiscal agent for
cancellation;
•
bonds that have become due and payable at maturity or otherwise and monies sufficient to pay
the principal of and any interest on these bonds have been paid or duly provided for; and
•
bonds in lieu of or in substitution for which other bonds have been authenticated and delivered
pursuant to the fiscal agency agreement.
“Public External Indebtedness” means any indebtedness of China Eximbank, or any guarantee or
indemnity by China Eximbank of indebtedness, for money borrowed which,
•
is in the form of or represented by any bond, note, debenture, debenture stock, loan stock,
certificate or other instrument which is, or is capable of being listed, quoted or traded on any
stock exchange or in any securities market (including, without limitation, any over-the-counter
market) outside mainland China (without regard, however, to whether or not such instruments
are sold through public offerings or private placements); and
•
has an original maturity of more than 365 days;
provided that Public External Indebtedness shall not include any indebtedness for borrowed money owed
to any financial institution in mainland China.
Definitive Bonds
Bonds represented in a global bond are exchangeable, in whole but not in part, for definitive bonds
of like tenor with coupons attached as such global bond in denominations of Rmb 10,000:
•
if the CMU operator notifies China Eximbank that CMU is unwilling or unable to continue as
the clearing system for such global bond and a replacement clearing system is not appointed
within 90 days;
— 55 —
•
if China Eximbank in its discretion at any time determines not to have all of the bonds
represented by a global bond; or
•
if an event of default with respect to the bonds entitling their holders to accelerate the maturity
of such bonds has occurred and is continuing.
When the global bond becomes exchangeable for definitive bonds, China Eximbank will promptly
deliver definitive bonds, duly authenticated and with interest coupons attached, in an aggregate principal
amount equal to the principal amount of the global bond to, or to the order of, the holder of the global bond
against the surrender of the global bond at the office of the fiscal agent, as specified in the fiscal agency
agreement, within 30 days of the holder of the global bond requesting such exchange.
Default; Acceleration of Maturity
Any of the following events will be an event of default with respect to the bonds:
•
China Eximbank fails to pay any amount of principal or interest in respect of the bonds on their
due dates and the continuance of such failure for 30 days; or
•
China Eximbank defaults in the performance or observance of any of its other obligations under
the bonds or the fiscal agency agreement and such default remains unremedied for 60 days
following receipt by China Eximbank of written notice from bondholders of an aggregate
principal amount of not less than 10% of the outstanding bonds requiring it to remedy such
failure; or
•
China Eximbank defaults in the payment of principal or interest in excess of US$25,000,000 (or
its equivalent in any other currency or currencies) payable (whether upon maturity, acceleration
or otherwise) in connection with its Public External Indebtedness (other than that represented
by the bonds), and the failure of China Eximbank to pay or validly reschedule (with the consent
of the holders of such Public External Indebtedness) the payment of such Public External
Indebtedness within 30 days of the date on which such payment has become due (including any
applicable days of grace); or
•
an order is issued or any other action is taken by appropriate authorities of or in China for the
dissolution or merger or consolidation of China Eximbank (except where China Eximbank is
the continuing entity) or for the transfer or assignment of the whole or a material part of its
assets (except, in either case, where all the obligations of China Eximbank under the bonds then
outstanding are legally assumed by another agency designated by the State Council; provided
that (i) such agency is a solvent financial institution organized and existing under the laws of
China, (ii) such agency is controlled, directly or indirectly, by China, (iii) such agency assumes
in writing all the obligations of China Eximbank under the bonds, and (iv) immediately after
giving effect to such transaction no event of default or event or condition that, with the giving
of notice or the lapse of time or both, would become an event of default has occurred and is
continuing); or
•
the PRC government ceases to own at least 51% of China Eximbank; or
•
unless the PRC central government fully guarantees or otherwise assumes the indebtedness, and
all obligations of China Eximbank, evidenced by the bonds and under the fiscal agency
agreement, the People’s Bank of China (or the successor central bank of China) ceases or fails
to provide the liquidity support stipulated in the Special Decree as in effect as of the date of
issuance of the bonds or the Special Decree (i) is modified in a manner which prejudices the
rights of the holders of the bonds or the related coupons or (ii) ceases to be valid or effective
unless it is replaced by such enactment or legislation which is not prejudicial to the rights of
the holders of the bonds or the related coupons.
If one or more of the events described above occurs with respect to the bonds, each bondholder may
declare the principal of the bonds due and payable immediately by written demand given to China
Eximbank and the fiscal agent at the office of the fiscal agent unless, prior to the receipt of that demand
by the fiscal agent, all defaults have been cured.
— 56 —
China Eximbank will notify the bondholders and the fiscal agent promptly upon becoming aware of
the occurrence of any event of default, but will not be obligated to furnish any periodic evidence as to the
absence of defaults.
Repayment of Monies
Any monies paid by China Eximbank to the fiscal agent in respect of any bonds and remaining
unclaimed at the end of two years after the principal of all bonds shall have become due and payable
(whether at maturity or otherwise) and monies sufficient therefor shall have been duly made available for
payment shall, together with any interest made available for payment thereon, be repaid to China
Eximbank. Upon such repayment, all liability of the fiscal agent with respect to such funds will cease, and
the holder of such bonds must look only to China Eximbank for any payment to which such holder may
be entitled.
Additional Amounts
All payments of principal and interest in respect of the bonds will be made without withholding or
deduction for or on account of any taxes, duties, assessments or governmental charges of whatsoever
nature imposed or levied by mainland China or any political subdivision or any authority thereof or therein
having power to tax, unless such withholding or deduction is required by the law of mainland China. In
that event, China Eximbank shall pay such additional amounts as will result in the receipt by the
bondholders of such amounts as would have been received by them if no such withholding or deduction
had been required, provided, however, that no such additional amounts shall be payable in respect of any
bond presented for payment:
•
by a bondholder which is liable to such taxes, duties, assessments or governmental charges in
respect of such bond by reason of its having some connection with the mainland China other
than the mere holding of such bond; or
•
by a bondholder who would not be liable for or subject to such withholding or deduction by
making a declaration of identity, non-residence or other similar claim for exemption to the
relevant tax authority if, after having been requested to make such a declaration or claim, such
holder fails to do so; or
•
more than 30 days after the Relevant Date except to the extent that the relevant holder would
have been entitled to such additional amounts if it had presented such bond on the last day of
such period of 30 days.
“Relevant Date” means whichever is the later of (i) the date on which the payment in question first
becomes due and (ii) if the full amount payable has not been received in Hong Kong SAR by the fiscal
agent on or prior to such due date, the date on which the full amount has been received and notice to that
effect has been given to the bondholders.
For the avoidance of doubt, China Eximbank’s obligation to pay additional amounts in respect of
taxes, duties, assessments and other governmental charges will not apply to (a) any estate, inheritance, gift,
sales, transfer, personal property or any similar tax, duty, assessment or other governmental charge or (b)
any tax, duty, assessment or other governmental charge which is payable otherwise than by deduction or
withholding from payments of principal of, or interest on the bonds; provided that China Eximbank shall
pay all stamp or other taxes, duties, assessments or other governmental charges, if any, which may be
imposed by mainland China or any political subdivision thereof or any taxing authority thereof or therein,
with respect to the fiscal agency agreement or as a consequence of the issuance of the bonds.
Any reference to principal or interest with respect to the bonds will be deemed to include any
additional amounts payable by China Eximbank in respect of such principal or interest.
Prescription
The right of a bondholder to receive any payment under the bonds shall become void 10 years (in
the case of principal) or six years (in the case of interest) after the Relevant Date for such payment.
— 57 —
Repurchase
Subject to applicable legal requirements, China Eximbank may at any time repurchase the bonds in
any manner and for any price. Any bonds China Eximbank repurchases may, at its discretion, be held,
resold or surrendered to the fiscal agent for cancellation.
Meeting
General. A meeting of bondholders may be called at any time:
•
to make, give or take any request, demand, authorization, direction, notice, consent, waiver or
other action provided for in the fiscal agency agreement or the bonds; or
•
to modify, amend or supplement the terms of the bonds.
If China Eximbank or the bondholders of at least 15% in aggregate principal amount of the
outstanding bonds request (in writing) that the fiscal agent call a meeting for any purpose described above,
the fiscal agent will call such a meeting. The meeting will be held at the time and place determined by the
fiscal agent.
Notice. The notice of a meeting will set forth the time and place of the meeting and in general terms
the actions proposed to be taken at the meeting. This notice will be given as provided in the terms of the
bonds. In addition, this notice will be given between 30 and 60 days before the meeting date.
Voting; Quorum. A person who holds or beneficially owns outstanding bonds or is duly appointed
to act as proxy for a holder of outstanding bonds will be entitled to vote at a meeting of bondholders.
Persons entitled to vote a majority in aggregate principal amount of the outstanding bonds will constitute
a quorum other than in respect of a reserved matter. For the purposes of a meeting of bondholders that
proposes to discuss a reserved matter, the persons entitled to vote 75% of the aggregate principal amount
of the outstanding bonds shall constitute a quorum.
At the reconvening of a meeting adjourned for a lack of a quorum, the presence of persons entitled
to vote 25% in aggregate principal amount of the outstanding bonds will constitute a quorum for the taking
of any action set forth in the notice of the original meeting.
In determining whether the holders of the requisite principal amount of outstanding bonds are present
at a meeting of bondholders for quorum purposes or have consented to or voted in favor of any request,
demand, authorization, direction, notice, consent, waiver, amendment, modification or supplement relating
to those bonds under the fiscal agency agreement, bonds owned directly or indirectly by China Eximbank
will be disregarded and deemed not to be outstanding.
Amendments
Certain Matters. The following actions require either: (1) the affirmative vote of holders of not less
than 66.67% of the aggregate principal amount of the outstanding bonds represented at a duly called and
held meeting of bondholders or (2) the written consent of the holders of not less than 66.67% of the
aggregate principal amount of the outstanding bonds:
•
for China Eximbank to modify, amend or supplement the terms of the bonds in any way; or
•
for the holders of the bonds to make, take or give any request, demand, authorization, direction,
notice, consent, waiver or other action provided by the bonds to be made, given or taken by
holders of the bonds; or
•
for holders of the bonds to rescind a declaration of the acceleration of the principal amount
thereof if the event or events of default giving rise to the declaration have been cured or
remedied and provided that no other event of default has occurred and is continuing.
— 58 —
Reserved Matters. The following actions require either: (1) the affirmative vote of holders of not less
than 75% of the aggregate principal amount of the outstanding bonds represented at a duly called and held
meeting of bondholders or (2) the written consent of the holders of not less than 75% of the aggregate
principal amount of the outstanding bonds:
•
change the due date for the payment of the principal of or any installment of interest on any
bond;
•
reduce the principal amount of any bond;
•
reduce the portion of the principal amount that is payable in the event of an acceleration of the
maturity of any bond;
•
reduce the interest rate on any bond;
•
reduce the premium payable, if any, upon the redemption of any bond;
•
change the currency in which or the required places at which any amount in respect of the bonds
is payable;
•
permit China Eximbank to redeem the bonds before their maturity date;
•
reduce the proportion of the aggregate principal amount of the bonds required to modify, amend
or supplement the fiscal agency agreement or the terms and conditions of the bonds;
•
reduce the proportion of the aggregate principal amount of the bonds required to make, take or
give any request, demand, authorization, direction, notice, consent, waiver or other action;
•
change China Eximbank’s obligation to pay additional amounts under the bonds; or
•
change the status of the bonds as described above.
No Consent. If both China Eximbank and the fiscal agent agree, they may, without the vote or
consent of any bondholder, amend the fiscal agency agreement or the bonds to:
•
add to the covenants of China Eximbank for the benefit of the bondholders;
•
surrender any right or power conferred upon China Eximbank;
•
secure the bonds pursuant to the requirements of the bonds or otherwise;
•
cure any ambiguity in, or cure, correct or supplement any defective provision of, the bonds; or
•
amend the bonds in any manner which China Eximbank and the fiscal agent may determine
which is not inconsistent with the bonds and does not adversely affect the interest of any
bondholder.
Any modification, amendment or supplement approved in the manner described above will be
binding on all bondholders.
Regarding the Fiscal Agent
China Eximbank has appointed Bank of China (Hong Kong) Limited, at 25th Floor, Bank of China
Centre, Olympian City, 11 Hoi Fai Road, West Kowloon, Hong Kong SAR, as its fiscal agent and principal
paying agent. The fiscal agency agreement contains provisions relating to the obligations and duties of the
fiscal agent, the indemnification of the fiscal agent and the fiscal agent’s relief from responsibility for
actions that it takes. China Eximbank may replace the fiscal agent at any time, subject to the appointment
of a replacement fiscal agent. China Eximbank may at any time appoint additional paying agents. China
Eximbank, however, will at all times maintain a paying agent in Hong Kong SAR, which at present is Bank
of China (Hong Kong) Limited, at 25th Floor, Bank of China Centre, Olympian City, 11 Hoi Fai Road,
West Kowloon, Hong Kong SAR. China Eximbank will cause notice of any termination or appointment of
any paying agent or fiscal agent to be given as provided under “— Notices” below.
— 59 —
The fiscal agent is an agent of China Eximbank and is not a trustee for the bondholders. China
Eximbank may maintain deposit accounts and conduct other banking transactions in the ordinary course
of business with the fiscal agent and other paying agents. The fiscal agent will not have the same
responsibilities or duties to act for any bondholder as would a trustee, except that monies paid to and held
by the fiscal agent as payment of principal of or interest on the bonds will be received and held by the fiscal
agent in trust for the bondholders pursuant to the fiscal agency agreement and the bonds.
Exchange and Replacement of Bonds
If a bond becomes mutilated, defaced, destroyed, lost or stolen, China Eximbank may issue, and the
fiscal agent will authenticate and deliver, a substitute bond. In each case, the applicant for a substitute bond
will be required to furnish to China Eximbank and to the fiscal agent an indemnity under which it will
agree to pay China Eximbank and the fiscal agent for any losses they may suffer relating to the bond that
was mutilated, defaced, destroyed, lost or stolen. China Eximbank and the fiscal agent may also require
that the applicant presents other documents or proof. The applicant will be required to pay all expenses and
reasonable charges associated with the replacement of the mutilated, defaced, destroyed, lost or stolen
bond.
Jurisdiction; Consent to Service
China Eximbank has appointed The Law Debenture Corporation (H.K.) Limited, at Room 3105,
Alexandra House, 18 Chater Road, Central, Hong Kong SAR, as its authorized agent upon whom process
may be served in any suit, legal action, or proceeding arising out of or based on the bonds, the fiscal agency
agreement or other related agreements which may be instituted in any court in Hong Kong SAR by any
bondholder and China Eximbank will irrevocably submit to the non-exclusive jurisdiction of any such
court in respect of any such action. Such appointment will be irrevocable until all amounts in respect of
the principal and interest due and to become due on or in respect of all the bonds have been provided to
the fiscal agent, except that if, for any reason, the authorized agent ceases to be able to act as such
authorized agent or ceases to have an address in Hong Kong SAR, China Eximbank will appoint another
agent in Hong Kong SAR as its authorized agent. China Eximbank is also subject to suit in competent
courts in China.
In respect of any proceedings described above, China Eximbank will irrevocably consent to the
giving of any relief and the issue of any process in connection with such proceedings, including, without
limitation, the making, enforcement or execution (against any assets whatsoever of China Eximbank,
irrespective of their uses or intended uses), of any order or judgment made or given in any such
proceedings, and to the extent that China Eximbank may in any jurisdiction claim for itself or its assets,
or have attributed to it or its assets, any right of immunity on the grounds of sovereignty from any legal
action, suit, proceeding, execution, attachment or other legal process, China Eximbank will irrevocably
agree not to claim and will waive such immunity to the fullest extent permitted by law.
China Eximbank has been advised by its PRC legal counsel, Jun He Law Offices, that there is doubt
as to the enforceability in China of any judgments obtained from non-PRC courts, including Hong Kong
SAR courts. The reciprocal recognition and enforcement of certain judgments under the Arrangement on
Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of
the Mainland and of Hong Kong SAR Pursuant to Choice of Court Agreements Between Parties Concerned
is applicable only when the parties have expressly agreed to submit to the exclusive jurisdiction of either
the PRC courts or the Hong Kong SAR courts. China Eximbank has not, however, elected to submit to the
exclusive jurisdiction of any such court on matters arising out of or based on the bonds, the fiscal agency
agreement and other related agreements.
Governing Law
The bonds, the fiscal agency agreement and other related agreements will be governed by, and
construed in accordance with, the laws of Hong Kong SAR, except that all matters governing authorization
and execution of the bonds, the fiscal agency agreement and other related agreements by China Eximbank
shall be governed by the PRC laws.
— 60 —
Notices
All notices will be published in English in South China Morning Post and in Chinese in Hong Kong
Economic Times. If at any time publication in such newspaper is not practicable, notices will be valid if
published in an English and/or Chinese language newspaper, as the case may be, with general circulation
in Hong Kong SAR. Any such notice will be deemed to have been given on the date of such publication
or, if published more than once on difference dates, on the first date on which publication is made.
So long as the bonds are represented by a global bond and the global bond is held by or on behalf
of CMU, notices required to be given to investors in the bonds may be given by delivery of the relevant
notice to the persons shown in a CMU instrument position report issued by the CMU operator on the
business day preceding the date of despatch of such notice as holding interests in the global bond for
communication to the CMU participants. Any such notice will be deemed to have been given to the
investors in the bonds on the second day after the day on which such notice is delivered to the persons
shown in the relevant CMU instrument position report as aforesaid. You will have to rely on your placing
bank as a CMU participant to deliver the notices to you, subject to the arrangements between you and such
CMU participant. China Eximbank does not accept any responsibility for any failure or delay on the part
of any CMU participant in doing so. If you wish to receive information in respect of your interests in the
bonds, you should contact your placing bank.
So long as the bonds are represented by a global bond and the global bond is held by or on behalf
of CMU, any investor in the bonds must deliver his/her notice to China Eximbank or the fiscal agent
through a direct or indirect CMU participant, with whom the investor maintains his/her beneficial
ownership in the bonds. Your placing bank should be such direct or indirect CMU participant for your
investment in the bonds.
— 61 —
SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM
The bonds will be represented by a global bond which will be delivered to and held by a
sub-custodian nominated by the HKMA as CMU operator. The global bond will be held for the account
of CMU members who have accounts with the CMU operator, or the CMU participants. Interests in the
global bond will only be shown on, and transfers of interests in the global bond will be effected through,
records maintained by the CMU operator.
The global bond will become exchangeable in whole, but not in part, for definitive bonds in the
denomination of Rmb 10,000 each and with interest coupons attached if any of the following events
occurs:
•
if the CMU operator notifies China Eximbank that CMU is unwilling or unable to continue as
the clearing system for such global bond and a replacement clearing system is not appointed
within 90 days;
•
if China Eximbank in its discretion at any time determines not to have all of the bonds
represented by a global bond; or
•
if an event of default with respect to the bonds entitling their investors to accelerate the
maturity of such bonds has occurred and is continuing.
Since the CMU operator can act only on behalf of the CMU participants, who in turn may act on
behalf of persons who hold interests through them, or indirect participants, the ability of persons having
interests in the global bond to pledge such interests to persons or entities that are not CMU participants,
or otherwise take action in respect of such interests, may be affected by the lack of definitive bonds.
While the global bond representing the bonds is held by or on behalf of the CMU operator, payments
of interest or principal will be made to the persons for whose account a relevant interest in the global bond
is credited as being held by the CMU operator at the relevant time, as notified to the fiscal agent by the
CMU operator in a relevant CMU instrument position report (as defined in the rules of CMU) or in any
other relevant notification by the CMU operator. Such payment will discharge China Eximbank’s
obligations in respect of that payment. Any payments by the CMU participants to indirect participants will
be governed by arrangements agreed between the CMU participants and the indirect participants and will
continue to depend on the inter-bank clearing system and traditional payment methods. Such payments will
be the sole responsibility of such CMU participants.
Payments, transfers, exchanges and other matters relating to interests in the global bond may be
subject to various policies and procedures adopted by the CMU operator from time to time. None of China
Eximbank, the joint lead managers and bookrunners, the placing banks, the fiscal agent and the paying
agent, or any of their agents will have any responsibility or liability for any aspect of the CMU operator’s
records relating to, or for payments made on account of, interests in the global bond, or for maintaining,
supervising or reviewing any records relating to such interests.
So long as any of the bonds remains outstanding and such bonds are represented by a global bond
held by or on behalf of CMU, the investors in the bonds must deliver notice to China Eximbank or the
fiscal agent through the placing bank with whom they maintain beneficial ownership in the global bond.
For so long as all of the bonds are represented by a global bond and the global bond is held on behalf
of the CMU operator, notices to the investors in the bonds may be given by delivery of the relevant notice
to the persons shown in a CMU instrument position report issued by the CMU operator on the business
day preceding the date of despatch of such notice as holding interests in the global bond for communication
to the CMU participants. Any such notice will be deemed to have been given to the investors in the bonds
on the second day after the day on which such notice is delivered to the persons shown in the relevant CMU
instrument position report as aforesaid. Indirect participants will have to rely on the CMU participants
(through whom they hold the bonds, in the form of interests in the global bond) to deliver the notices to
them, subject to the arrangements agreed between the indirect participants and the CMU participants.
— 62 —
The CMU operator is under no obligation to maintain or continue to operate the CMU and the CMU
operator is under no obligation to perform or continue to perform the procedures described above.
Accordingly, CMU and such procedures may be discontinued or modified at any time. None of China
Eximbank, joint lead managers and bookrunners, the placing banks, the fiscal agent and the paying agent
nor any of their agents will have any responsibility for the performance by the CMU operator or the CMU
participants of their respective obligations under the rules and procedures governing their operations.
— 63 —
SIGNIFICANT DIFFERENCES BETWEEN PRC ACCOUNTING STANDARDS AND
INTERNATIONAL FINANCIAL REPORTING STANDARDS
China Eximbank’s financial statements appearing in this offering circular under the caption
“Financial Accounting Matters — Report of General Manager (Accounting Department)” were prepared
in accordance with the accounting principles and practices promulgated by the Ministry of Finance under
the PRC laws, rules and regulations. Such principles and practices may differ in material respects from
generally accepted accounting principles in other jurisidctions. The following is a summary of significant
differences between such PRC accounting standards as applicable to China Eximbank and IFRS. You
should note that this is a summary only and is not meant to be an exhausive description of all significant
differences between these accounting standards.
Current Accounting Policies Adopted by China Eximbank
Since January 1, 2009, China Eximbank has adopted the Accounting Standards for
Enterprises—Basic Standards and 38 specific accounting standards issued by the Ministry of Finance on
February 15, 2006, subsequently issued Implementation Guidelines on Accounting Standards for
Enterprises, Interpretation of Accounting Standards for Enterprises and other relevant regulations and
guidelines issued by the Ministry of Finance applicable to China Eximbank, which are hereinafter
collectively referred to as Accounting Standards for Enterprises. China Eximbank has established its
accounting policies and accounting estimates, pursuant to which its financial statements are prepared, in
accordance with the relevant provisions of Accounting Standards for Enterprises.
Despite its adoption of Accounting Standards for Enterprises, China Eximbank still applies special
accounting policies in respect of its benefit obligations to retired and internally retired employees.
Specifically, China Eximbank continues to use cash basis accounting in respect of its obligations on the
supplemental retirement benefits and internal retirement benefits to retired and internally retired
employees.
Related International Financial Reporting Standards
Accounting Standards for Enterprises promulgated in China since February 15, 2006 are substantially
the same as IFRS, in general and material aspects. Accordingly, there are no significant differences
between the principal accounting policies and relevant accounting principles adopted by China Eximbank
and IFRS. The relevant IFRS standards used to compare with those adopted by China Eximbank include
the following:
•
IAS 26—Accounting and Reporting in Respect of Retirement Benefit Plan
•
IAS 36—Impairment of Assets
•
IAS 24—Disclosure of Related Parties
Analysis of Principal Differences
For the following items, there exist significant differences between the current accounting policies
adopted by China Eximbank and the provisions under IFRS:
•
Employee retirement benefits
•
Provision on impairment of assets
•
Disclosure of related parties and their transactions
Employee Retirement Benefits
China Eximbank has adopted cash basis accounting in respect of its payment of pensions and benefits
to or for its retired employees and has recorded it in the current profit and loss when it actually occurs.
— 64 —
Under IFRS, such pensions and benefits constitute the compensation for the services provided by
employees during their employment rather than the compensation for retirement itself, and enterprises
must recognize and measure such pensions and benefits during the accounting period when employees
provide services. Accordingly, IAS 26 provides that enterprises must establish retirement benefits plan for
their employees and recognize the corresponding liabilities based on the actuarial present value of
retirement benefit obligations. The actuarial present value of retirement benefit obligations is the present
value of the expected payment determined using the current or expected salaries level according to the
services that have already been provided by employees, on the basis of the benefit amount stipulated under
the retirement benefit plan.
Accordingly, the differences in respect of the accounting treatment on retirement benefits between
the accounting policies adopted by China Eximbank and IFRS are mainly the recognition period and
measurement method of such retirement benefits, which are also the differences between current
accounting policies adopted by China Eximbank and the Accounting Standards for Enterprises.
As a result, for the employee retirement benefits, the results of accounting treatment under IFRS will
be significantly different from those under the current accounting policies adopted by China Eximbank.
Provision for Impairment of Assets
Under the current accounting policies of China Eximbank, when the recoverable amount of an asset
or an asset group is less than its carrying amount, the carrying amount is reduced to its recoverable amount.
The reduction amount is charged to the current profit or loss and an impairment allowance is recorded at
the same time. The above impairment losses, once recognized, cannot be reversed in subsequent periods.
The asset impairment loss is recognized and measured under IFRS in the same way as under China
Eximbank’s current accounting policies, and the difference exists in the reversal of asset impairment loss.
In accordance with IAS 36, an enterprise must assess at the end of each reporting period as to whether
there is any indication that previously recognized impairment losses other than goodwill no longer exist
or may have decreased. If such an indication exists, the enterprise must assess the recoverable amount of
the asset. A previously recognized impairment loss of an asset other than goodwill can be reversed if, and
only if, there has been a change in the estimates used to determine the recoverable amount of that asset
since the previous recognization.
China Eximbank’s accounting policies in relation to provisions for asset impairment are in
compliance with the Accounting Standards for Enterprises and the difference exists between the
Accounting Standards for Enterprises and IFRS.
As of December 31, 2009, China Eximbank had no such impairment items. Therefore, the above
difference had no substantial impact on its 2009 financial statements.
Disclosure of Related Parties and Their Transactions
China Eximbank is a statutory financial institution, or policy bank, established under the laws of
China, and its controlling person, from a legal ownership perspective, is the Ministry of Finance on behalf
of the PRC central government. Under IAS 24, as China Eximbank and other entities directly or indirectly
controlled by the Ministry of Finance constitute related parties as a result of the common control under the
Ministry of Finance, it must disclose transactions with such other entities, including without limitation:
•
Loans, provision of credit and guarantees and deposit-taking;
•
Interbank lending;
•
Trading, underwriting and redemption of debt securities issued by other state-owned entities;
•
Provision of services related to foreign exchange, remittance and investment; and
•
Entrusted loans and provision of other custody services.
— 65 —
Disclosure of the related party transactions and balances under IFRS must describe the transactions’
nature and amounts and whether there are unfair pricing terms. With respect to banking operations, the
disclosure must include not only the transaction amounts and balances at period ends, but also material
terms including deposit and lending interest rates, for use by financial statement readers.
Under the Accounting Standards for Enterprises and the current accounting policies of China
Eximbank, China Eximbank does not treat itself as a related party with other entities controlled by the
Ministry of Finance or the PRC central government and no relevant disclosure is required.
According to the results of consultation between the Ministry of Finance and the International
Accounting Standards Board, or IASB, IASB has agreed that, under the current conditions in China, the
state-owned enterprises under the common control of the government may be disclosed not as related
parties.
— 66 —
TAXATION OF BONDS
The following summary of certain taxation provisions under the PRC and Hong Kong SAR law is
based on current law and practice. It does not purport to be comprehensive and does not constitute legal
or tax advice. You (particularly if you are subject to special tax rules, such as banks, dealers, insurance
companies and tax-exempt entities) should consult your own tax advisers regarding the tax consequences
of an investment in the bonds.
PRC Taxation
In the opinion of Jun He Law Offices, PRC legal counsel to China Eximbank, and King & Wood, PRC
legal counsel to the Joint Lead Managers, the following summary accurately describes the principal PRC
tax consequences of ownership of the bonds by investors who are not residents of mainland China for PRC
tax purposes and do not conduct business activities in mainland China. If you are considering an
investment in the bonds, you should consult your own tax advisors with regard to the application of PRC
tax laws to your particular situation as well as any tax consequences arising under the laws of any other
tax jurisdiction. Reference also is made to the avoidance of double taxation arrangement between mainland
China and Hong Kong SAR with respect to Hong Kong SAR taxes from the year of assessment beginning
on or after April 1, 2007 and with respect to PRC taxes from the taxable year beginning on or after January
1, 2007.
Pursuant to the PRC Enterprise Income Tax Law and the PRC Individual Income Tax Law and their
implementation rules, an income tax is levied on the payment of interest in respect of loans, including
bonds sold by enterprises established within the territory of mainland China to non-resident enterprises
(including Hong Kong SAR enterprises) and non-resident individuals (including Hong Kong SAR
residents). The current rates of such income tax are 20% for non-resident individuals and 10% for
non-resident enterprises of the gross amount of the interest paid on the bonds. However, the tax so charged
on interest paid on the bonds to non-PRC investors in the bonds who are residents of Hong Kong SAR
(including enterprises and individuals) for purposes of the avoidance of double taxation arrangement
between mainland China and Hong Kong SAR will be 7% of the gross amount of the interest pursuant to
the arrangement between mainland China and Hong Kong SAR. China Eximbank has undertaken to pay
additional amounts to such investors in the bonds so that they receive the full amount of the scheduled
payment, as further set out in the terms and conditions of the bonds.
According to the avoidance of double taxation arrangement between mainland China and Hong Kong
SAR, residents of Hong Kong SAR will not be subject to PRC tax on any capital gains derived from a sale
or exchange of the bonds. For other investors in the bonds, non-resident individuals are not subject to PRC
tax on any capital gains derived from a sale or exchange of the bonds, whereas it is unclear whether the
capital gains of non-resident enterprises derived from a sale or exchange of bonds will be subject to PRC
income tax according to the PRC Enterprise Income Tax Law and its implementation rules. If the capital
gains of the non-resident enterprises are determined as income sourced in mainland China by PRC tax
authorities, those non-resident enterprise investors, other than Hong Kong SAR residents, may be subject
to enterprise income tax at a rate of 10% of the gross proceeds unless other tax preferential treatments are
provided by any special tax arrangements.
Hong Kong SAR Taxation
Withholding Tax. Under existing Hong Kong SAR law, payments of principal and interest in respect
of the bonds may be made without withholding for or on account of any Hong Kong SAR taxes. In
addition, no tax is withheld in Hong Kong SAR in respect of any gains arising from resale of bonds.
Stamp Duty. The bonds are not subject to Hong Kong SAR stamp duty either upon issue or on any
subsequent transfer.
Profits Tax. Profits tax is charged on every person carrying on a trade, profession or business in Hong
Kong SAR in respect of assessable profits arising in or derived from Hong Kong SAR from such trade,
profession or business.
Estate Duty. Estate duty has been abolished in Hong Kong SAR with respect to estates forming after
February 11, 2006.
— 67 —
GENERAL INFORMATION
China Eximbank has authorized the issue and terms of the bonds and other debt securities in an
aggregate principal amount of up to Rmb 5,000,000,000 (which includes the bonds offered to the retail
investors and the bonds and other debt securities offered to institutional and other investors) pursuant to
(i) the approval of the People’s Bank of China dated October 15, 2010 and (ii) the approval of the National
Development and Reform Commission dated August 27, 2010, each in accordance with the Provisional
Method on Issuance by Domestic Financial Institutions of Renminbi-Denominated Debt Securities in Hong
Kong SAR jointly issued by the People’s Bank of China and the National Development and Reform
Commission of China on June 8, 2007, and the resolutions of the board of directors of China Eximbank
dated August 24, 2010. China Eximbank has obtained all necessary consents, approvals and authorizations
in China in connection with the issue and performance of the bonds, all of which are in full force and
effect. During the subscription period and for so long as any of the bonds are outstanding, the following
documents may be inspected during usual business hours at the specified office of the fiscal agent and each
paying agent, each currently at 25th Floor, Bank of China Centre, Olympian City, 11 Hoi Fai Road, West
Kowloon, Hong Kong SAR, and the registered office of China Eximbank at No. 30 Fuxingmennei Street,
Xicheng District, Beijing 100031, China:
•
copies of the approval of the People’s Bank of China, dated October 15, 2010, approving the
issuance of the bonds (in Chinese with English translation);
•
copies of the approval of the National Development and Reform Commission of China, dated
August 27, 2010, approving the issuance of the bonds (in Chinese with English translation);
•
certified copies of the fiscal agency agreement (in English);
•
conformed copies of the global bond, with full terms and conditions (in English);
•
copies of the market making agreement (in English);
•
copies of the latest annual consolidated financial statements of China Eximbank prepared and
examined in accordance with the accounting principles and practices promulgated by the
Ministry of Finance under the PRC laws, rules and regulations (in Chinese with English
translation);
•
copies of the articles of association of China Eximbank (in Chinese with English translation);
•
copies of this offering circular (in Chinese and English);
•
copies of all amendments and supplements to this offering circular (in Chinese and English);
and
•
any notices given by China Eximbank or the fiscal agent in respect of the bonds and coupons.
China Eximbank will apply for registration of the proceeds of the bonds with the State Administration
of Foreign Exchange of China within 10 working days of the issue date of its bonds pursuant to the Interim
Measures. Failure to register the bonds pursuant to the Interim Measures will not affect the validity and
enforceability of the bonds. In addition, China Eximbank will apply for ratification of each principal or
interest payment with the local State Administration of Foreign Exchange branch office five working days
prior to each principal or interest payment date pursuant to the Interim Measures. If China Eximbank fails
to obtain such ratification, the repayment of the principal and/or interest of the bonds will be adversely
affected. Since the issuance of the bonds has been approved by the People’s Bank of China and the
National Development and Reform Commission of China pursuant to the Interim Measures, China
Eximbank does not expect the local State Administration of Foreign Exchange branch office will refuse the
above registration and ratification. “Working day” means a day other than a Saturday or Sunday or any
public holidays in China.
China Eximbank has not authorized anyone to give you any information about its bonds other than
the information in this offering circular. You should not rely on any other information.
— 68 —
China Eximbank’s offering circular is also available in Chinese from each placing bank listed on page
15 of this offering circular. For the terms and conditions of the bonds, the English version will prevail, and
the Chinese version is only a translation for your reference only.
During the life of the bonds, China Eximbank will give notice to the investors in the bonds of any
changes in the financial condition of, or other circumstances relating to, China Eximbank that could
reasonably be expected to materially and adversely affect its ability to meet its obligations under its bonds.
You will have to rely on your placing bank to forward the notices to you.
Except as disclosed in the “Risk Factors” section of this offering circular, there has been no adverse
change, or any development reasonably likely to involve an adverse change, in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of China Eximbank since December
31, 2009, the date of China Eximbank’s latest consolidated financial statements, that is material in the
context of the issue of the bonds.
China Eximbank is neither involved in any litigation, arbitration or administrative proceedings
against or affecting China Eximbank or any of its assets which are or might be material in the context of
the issue of the bonds nor aware of any such litigation, arbitration or administrative proceedings, whether
pending or threatened.
The bonds have been accepted for clearance through CMU with the CMU Instrument Number
BCHKFB10098.
This offering circular is not a prospectus under the Companies Ordinance (Cap. 32, Law of Hong
Kong).
— 69 —
FINANCIAL ACCOUNTING MATTERS
Pursuant to the financial reporting rules and regulations applicable to China Eximbank, the
consolidated accounts of China Eximbank are not examined by external auditors. The Accounting
Department of China Eximbank prepares annual consolidated financial statements (which include a
consolidated balance sheet, a consolidated income statement, a consolidated statement of cash flows and
a consolidated statement of changes in shareholders’ equity) and submits them to the president and vice
presidents of China Eximbank for approval. The consolidated financial statements are then submitted to
the Ministry of Finance for review and approval. The National Audit Office has authority to examine China
Eximbank’s accounting procedures and its consolidated financial statements at any time. The consolidated
financial statements of China Eximbank are available to the public. The present general manager in charge
of the Accounting Department of China Eximbank is Mr. Yang Qing.
China Eximbank’s consolidated financial statements appearing in this offering circular were prepared
in Chinese in accordance with the accounting principles and practices set forth in Note I to the consolidated
financial statements in the Report of General Manager (Accounting Department) and may differ in material
respects from generally accepted accounting principles in other jurisdictions. The section entitled
“Significant Differences Between PRC Accounting Standards and International Financial Reporting
Standards” in this offering circular contains a summary of significant differences between the PRC
accounting standards and IFRS as applicable to China Eximbank. The English version of China
Eximbank’s consolidated financial statements is a translation from its original Chinese version.
China Eximbank does not consolidate its foreign government loan on-lending operations into its
consolidated financial statements with respect to foreign governmental loans on-lent to central or
provincial governmental agencies or borrowers guaranteed by central or provincial governmental agencies.
Such on-lending operations are recorded on a separate balance sheet because China Eximbank acts as an
agent of the PRC central government in such operations. See “ Financial Accounting Matters — Report of
General Manager (Accounting Department) — Note VII. Balance Sheet of On-lending Loans of Foreign
Governments” beginning on page F-28 in this offering circular. In accordance with the agency
arrangements between China Eximbank and the Ministry of Finance, China Eximbank is acting as an agent
of the Ministry of Finance in administering these loans. Although China Eximbank is required to front
funds toward the payment of the principal, interest and foreign banking charges on behalf of the Ministry
of Finance in accordance with the loan agreements between the Ministry of Finance and foreign lenders
and related PRC regulations, the agency arrangements expressly provide that China Eximbank has no
liability to pay any principal, interest or foreign banking charges with respect to the loans. In its capacity
as such on-lending agent, China Eximbank has been fully reimbursed by the Ministry of Finance with
respect to all its fronted funds. However, the administrative fees and charges received, and the expenses
incurred, by China Eximbank in connection with such on-lending operations are included in its
consolidated income statement.
The notes to China Eximbank’s consolidated financial statements in this offering circular constitute
an integral part of such consolidated financial statements. You should read China Eximbank’s consolidated
financial statements in conjunction with these accompanying notes.
— F-1 —
Report of General Manager (Accounting Department)
I have examined the consolidated balance sheets of The Export-Import Bank of China (“China
Eximbank”) as at December 31, 2008 and 2009 and the consolidated income statements, consolidated
statements of cash flows and consolidated statements of changes in shareholders’ equity for each of the two
fiscal years ended December 31, 2008 and 2009 and the notes relating thereto. In my opinion, the
consolidated financial statements are in conformity with the accounts of China Eximbank and comply with
the accounting principles and practices applicable to China Eximbank as set forth in Note I to such
consolidated financial statements. The consolidated financial information presents fairly and accurately the
financial position and results of operations of China Eximbank, as at the dates and for the periods therein
stated.
/s/ Yang Qing
YANG QING
General Manager (Accounting Department)
The Export-Import Bank of China
November 5, 2010
Beijing, People’s Republic of China
— F-2 —
China Eximbank Consolidated Balance Sheet
As of December 31,
2009
2008
(in thousands of Rmb)
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . .
Due from Central Bank . . . . . . . . . . . . . . . . . . . .
Expensive Metals . . . . . . . . . . . . . . . . . . . . . . . .
Due from Correspondent Banks . . . . . . . . . . . . . .
Interbank Lendings . . . . . . . . . . . . . . . . . . . . . . .
Lending to Banks and Other Financial Institutions .
Trading Assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative Financial Assets . . . . . . . . . . . . . . . . .
Securities Purchased under Resale Agreements . . .
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . .
Accrued Interest . . . . . . . . . . . . . . . . . . . . . . . . .
Other Receivables . . . . . . . . . . . . . . . . . . . . . . . .
Loans and Advances . . . . . . . . . . . . . . . . . . . . . .
Available-for-Sale Financial Assets . . . . . . . . . . . .
Held-to-Maturity Investment . . . . . . . . . . . . . . . . .
Long-term Equity Investments . . . . . . . . . . . . . . .
Investment Real Estate . . . . . . . . . . . . . . . . . . . .
Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in Progress . . . . . . . . . . . . . . . . . . .
Disposal of Fixed Assets . . . . . . . . . . . . . . . . . . .
Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term Deferred Expense . . . . . . . . . . . . . . . .
Capital fro Debt Payment . . . . . . . . . . . . . . . . . . .
Deferred Income Tax Assets . . . . . . . . . . . . . . . . .
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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161,626.74
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3,778,716.31
.
—
.
—
. 120,852,455.34
.
9,611,238.98
.
—
.
389,549.58
. 29,805,869.75
.
5,549,090.53
.
2,415,061.50
.
208,966.34
. 591,884,951.50
. 10,263,127.02
. 12,223,785.94
.
1,895,166.70
.
—
.
1,139,821.65
.
471,497.20
.
33.91
.
20,171.60
.
—
.
50,991.17
.
19,220.50
.
1,337,514.00
.
59,004.04
76,355.99
1,489,349.12
—
—
100,856,695.35
16,958,602.51
—
1,150,722.42
1,387,100.00
632,409.47
2,586,356.33
60,106.73
442,464,153.11
37,591,593.72
32,110,014.83
1,227,962.11
—
971,272.11
131,616.21
32.36
29,973.47
—
76,950.99
—
1,758,363.08
10,537.67
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792,137,860.30
641,570,167.58
— F-3 —
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As of December 31,
2009
2008
(in thousands of Rmb)
Liabilities
Due to Central Bank . . . . . . . . . . . . . . . . . . .
Dut to Correspondent Banks . . . . . . . . . . . . .
Due to Other Banks and Financial Institutions .
Interbank Borrowings. . . . . . . . . . . . . . . . . . .
Trading Financial Liabilities . . . . . . . . . . . . .
Derivative Financial Liabilities . . . . . . . . . . . .
Securities Sold under Repurchase Agreements .
Due to Customers . . . . . . . . . . . . . . . . . . . . .
Employee Pay Payable . . . . . . . . . . . . . . . . .
Tax Payable. . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Payable . . . . . . . . . . . . . . . . . . . . . . .
Other Account Payable . . . . . . . . . . . . . . . . . .
Estimated Liabilities . . . . . . . . . . . . . . . . . . .
Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Income Tax Liabilities . . . . . . . . . . .
Other Liabilities . . . . . . . . . . . . . . . . . . . . . .
.
—
.
—
. 211,696,483.22
.
11,221,506.15
.
—
.
415,856.72
.
2,791,223.34
. 51,277,339.36
.
—
.
681,314.95
.
1,889,846.92
.
673,217.14
.
1,193,916.67
. 488,589,313.05
.
98,585.31
.
11,420,374.07
—
—
198,120,813.41
12,658,674.35
—
852,393.58
—
44,182,976.17
—
858,193.76
3,770,468.28
345,685.29
1,058,926.48
367,600,363.29
287,680.61
4,250,908.16
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 781,948,976.90
633,987,083.38
Equity
Paid-in Capital . . . . . . . . . . . .
State-owned Capital . . . . . .
Foreign Capital . . . . . . . . . .
Capital Surplus and Reserves . .
Less: Treasury Stock . . . . . .
Earnings Surplus . . . . . . . . . . .
General Risk Reserve. . . . . . . .
Undistributed Profit . . . . . . . . .
Translation Reserve . . . . . . . .
Attributable to Shareholder’s of
Minority Interests . . . . . . . . . .
.......
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the Bank
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5,000,000.00
5,000,000.00
—
13,592.83
—
394,053.44
3,571,173.63
1,210,063.50
—
10,188,883.40
—
5,000,000.00
5,000,000.00
—
-71,247.18
—
394,053.44
3,571,173.63
-1,310,895.69
—
7,583,084.20
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Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,188,883.40
7,583,084.20
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792,137,860.30
641,570,167.58
— F-4 —
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.
China Eximbank Consolidated Income Statements
For the year ended
December 31,
2009
I.
Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Net Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
Net fee and Commission Income . . . . . . . . . . . . . . . . .
Fee and Commission Income . . . . . . . . . . . . . . . . . . . .
Fee and Commission Expense. . . . . . . . . . . . . . . . . . . .
3.
Investment Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of Profits/Losses of Associates and Joint Venutres
4.
Profits/Losses from Financial Assets at Fair Value
(“-” for losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.
Other Income/Loss (“-” for losses) . . . . . . . . . . . . . . . .
Foreign Exchange Profits/Losses (“-” for losses) . . . . . .
Other Business Income. . . . . . . . . . . . . . . . . . . . . . . . .
II. Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
Business Tax and Affixation . . . . . . . . . . . . . . . . . . . .
2.
General and Administrative Expenses . . . . . . . . . . . . . .
3.
Impairment Losses on Assets . . . . . . . . . . . . . . . . . . . .
4.
Other Business Cost. . . . . . . . . . . . . . . . . . . . . . . . . . .
III. Operating Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add: Non-Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . .
Less: Non-Operating Expenses . . . . . . . . . . . . . . . . . . . . . . .
IV. Profits before income tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Income Tax Expense . . . . . . . . . . . . . . . . . . . . . . . . . .
V.
Net Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Attributable to Equity Holders of China Eximbank . . . . . . . .
Minority Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VI. Earning Per Share:
1.
Primary Earnings per Share . . . . . . . . . . . . . . . . . . . . .
2.
Diluted Earnings per Share . . . . . . . . . . . . . . . . . . . . .
VII. Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . .
VIII. Total Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . .
Attributable to Equity Holders of China Eximbank . . . . . . . .
Attributable to Minority Interests . . . . . . . . . . . . . . . . . . . . .
— F-5 —
2008
(in thousands of Rmb)
5,911,401.21
6,335,244.73
3,498,109.67
3,622,584.56
23,737,595.23
22,400,883.35
20,239,485.56
18,778,298.80
1,952,911.39
1,823,037.96
2,003,509.40
1,892,574.24
50,598.02
69,536.28
896,767.44
950,791.53
—
—
-329,010.49
-107,376.79
-180,828.98
73,452.18
2,862,053.58
1,175,524.92
1,029,408.90
625,095.57
32,024.19
3,049,347.63
447,264.98
10,309.91
3,486,302.70
965,343.51
2,520,959.19
—
—
489,620.11
-550,789.43
-560,511.88
9,722.45
3,707,776.86
1,152,345.48
862,507.23
1,692,924.15
—
2,627,467.87
211,175.27
12,712.97
2,825,930.17
604,042.67
2,221,887.50
—
—
—
—
82,630.26
2,603,589.45
2,603,589.45
—
—
—
-73,292.92
2,148,594.58
2,148,594.58
—
China Eximbank Consolidated Statements of Cash Flows
For the year ended
December 31,
2009
2008
(in thousands of Rmb)
I.
Cash Flows from Operating Activites
Net increase in due to customers and balances with banks . .
Net increase in due to central bank . . . . . . . . . . . . . . . . . .
Net increase in placements from other financial institutions
Net increase in fee and commission income . . . . . . . . . . . .
Other cash inflows from operating activities . . . . . . . . . . . .
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.
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.
21,232,152.29 154,926,578.70
—
—
—
—
21,690,722.37 21,663,504.29
10,991,322.49
374,319.67
Cash inflows from operating activities . . . . . . . . . . . . . . . . . . .
53,914,197.15 176,964,402.66
Net increase in loans and advances to customers. . . .
Net increase in balances with central bank and banks
Fee and commission paid. . . . . . . . . . . . . . . . . . . . .
Payments to and for employees . . . . . . . . . . . . . . . .
Tax and fee paid . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other cash outflows from operating activities . . . . . .
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.
. 155,974,180.74 139,849,831.04
.
— 61,773,370.00
.
3,941,922.33
2,701,890.31
.
275,181.21
155,448.00
.
2,148,459.48
728,612.82
.
3,754,045.78
2,407,170.93
Cash outflows from operating activities . . . . . . . . . . . . . . . . . . 166,093,789.54 207,616,323.10
Net cash flows from operating activities . . . . . . . . . . . . . . . . . -112,179,592.41 -30,651,920.43
II.
Cash flows from investing activities
Cash received from disposal of investments . . . . . . . . . . . . . . . . 142,719,465.53
Income received from investment . . . . . . . . . . . . . . . . . . . . . . .
835,166.00
Other cash inflows from investing activities . . . . . . . . . . . . . . .
—
54,961,466.39
1,086,788.49
—
Cash inflows from investing activities . . . . . . . . . . . . . . . . . . . 143,554,631.53
56,048,254.88
Cash outflows from investment . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from purchase and construction of fixed assets,
intangible assets and other long-term assets. . . . . . . . . . . . . . .
Other cash outflows from investing activities . . . . . . . . . . . . . . .
93,535,587.87 116,524,782.47
Cash outflows from investing activities . . . . . . . . . . . . . . . . . .
93,894,118.38 117,031,312.78
Net cash flows from investing activities . . . . . . . . . . . . . . . . . .
49,660,513.15 -60,983,057.90
III. Cash flows from financing activities
Cash received from investors . . . . . . . . . . . . . . . . . . .
Include: cash received from minority investment in
subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Cash received from issuance of bonds . . . .
Other cash inflows from financing activities . . . . . . .
........
358,530.51
—
—
221,244.28
285,286.03
—
........
—
—
. . . . . . . . 191,009,175.47 172,247,861.13
........
—
—
Cash inflows from financing activities . . . . . . . . . . . . . . . . . . . 191,009,175.47 172,247,861.13
Repayments for debts issued . . . . . . . . . . . . . . . . . . . . . . .
Cash payments for interest expenses and distribution of
dividends or profit . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Include: dividend payments to minority equity holders in
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other cash outflows from financing activities . . . . . . . . . .
....
69,898,521.00
73,874,102.34
....
13,618,678.61
10,242,429.83
....
....
—
—
—
—
Cash outflows from financing activities . . . . . . . . . . . . . . . . . .
83,517,199.61
84,116,532.18
Net cash flows from financing activities. . . . . . . . . . . . . . . . . . 107,491,975.86
88,131,328.95
IV.
Effect of exchange rate changes on cash and cash equivalents.
254,379.92
-1,035,715.04
V.
Net increase in cash and equivalents . . . . . . . . . . . . . . . . . . . .
45,227,276.51
-4,539,364.42
Add: cash and cash equivalents at beginning of year . . . . . . . . . .
23,028,780.62
27,568,145.04
VI. Cash and cash equivalents at end of year . . . . . . . . . . . . . . . .
68,256,057.13
23,028,780.62
— F-6 —
China Eximbank Consolidated Statement of Changes in Shareholder’s Equity
for the year ended December 31, 2009
Items
I. Balance at the end of year 2008 . .
Add: change in accounting policy . .
Corrections of prior period errors . .
II. Balance at the beginning of year
2009 . . . . . . . . . . . . . . .
III. Change through year 2009
(“-” for losses) . . . . . . . . . .
1. Net profit . . . . . . . . . . .
2. Gains/Losses Directly Recorded
into the Owner’s Equities . . . .
(1). Net change in fair value of
available-for-sale financial
assets . . . . . . . . . .
(a). recognized in equity
items. . . . . . . . .
(b). recognized in profit/loss
for the current period .
(2). Net change in fair value of
cash flow hedging
instrument . . . . . . . .
(a). amounts recognized in
owners’ equity . . . .
(b).amounts recognized in
profit/loss for the
current period . . . . .
(c).recognized in initial
recognition amount of
hedged items . . . . .
(3). Consequences of other
owners’ equity changes in
invested units under equity
method . . . . . . . . .
(4). Income tax consequences
concerning items recognized
in owners’ equity . . . . .
(5). Other . . . . . . . . . .
Total of 1 & 2. . . . . . . . . . .
3. Capital paid in and reduced by
owners . . . . . . . . . . . .
(1). Capital paid in by owners .
(2). Amounts of share-based
payments recognized in
owners’ equity . . . . . .
(3). Other . . . . . . . . . .
4. Dividends . . . . . . . . . .
(1). Appropriation of statutory
surplus reserves . . . . . .
(2). Appropriations to general
risk provisions . . . . . .
(3). Dividends to holders . . .
(4). Other . . . . . . . . . .
5. Internal carry-over of
shareholders’ equity . . . . . .
(1). Capitalized capital reserves .
(2). Capitalized surplus reserves
(3). Surplus reserves for making
up losses . . . . . . . . .
(4). General risk provisions for
making up losses . . . . .
(5). Other . . . . . . . . . .
IV. Balance at the end of year 2009 . .
Paid-in
capital
Capital
reserve
Less: shares
at hand
Statutory
reserves
Currency
translation
differences
General risk
reserves
Undistributed
profits
1,043,549.35
-2,181,841.37
-172,603.67
— 9,466,409.55
— -1,713,722.07
— -169,603.28
Total equity
5,000,000.00
—
—
-539,366.48
468,119.30
—
—
—
—
(In thousands of Rmb)
391,053.05 3,571,173.63
—
—
3,000.39
—
5,000,000.00
-71,247.18
—
394,053.44
3,571,173.63
-1,310,895.69
—
7,583,084.20
—
—
84,840.01
—
—
—
—
—
—
—
2,520,959.19
2,520,959.19
—
—
2,605,799.20
2,520,959.19
—
82,630.26
—
—
—
—
—
82,630.26
ⳮ
110,173.69
—
—
—
—
—
110,173.68
—
4,791.65
—
—
—
—
—
4,791.65
—
105,382.03
—
—
—
—
—
105,382.03
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
-27,543.42
—
82,630.26
—
—
—
—
—
—
—
—
—
—
—
2,520,959.19
—
—
—
-27,543.42
—
2,603,589.45
—
—
2,209.75
—
—
—
—
—
—
—
—
—
—
—
2,209.75
—
—
—
—
—
2,209.75
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,209.75
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,000,000.00
—
—
13,592.83
—
—
—
—
—
394,053.44
—
—
3,571,173.63
—
—
1,210,063.50
— F-7 —
—
—
—
—
— 10,188,883.40
China Eximbank Consolidated Statement of Changes in Shareholder’s Equity
for the year ended December 31, 2008
Items
I. Balance at the end of year 2008 . .
Add: change in accounting policy . .
Corrections of prior period errors . .
II. Balance at the beginning of year
2009 . . . . . . . . . . . . . . .
III. Change through year 2009
(“-” for losses) . . . . . . . . . .
1. Net profit . . . . . . . . . . .
2. Gains/Losses Directly Recorded
into the Owner’s Equities . . . .
(1). Net change in fair value of
available-for-sale financial
assets . . . . . . . . . .
(a). recognized in equity
items. . . . . . . . .
(b). recognized in profit/loss
for the current period .
(2). Net change in fair value of
cash flow hedging
instrument . . . . . . . .
(a). amounts recognized in
owners’ equity . . . .
(b). amounts recognized in
profit/loss for the
current period . . . .
(c). recognized in initial
recognition amount of
hedged items . . . . .
(3). Consequences of other
owners’ equity changes in
invested units under equity
method . . . . . . . . .
(4). Income tax consequences
concerning items recognized
in owners’ equity . . . . .
(5). Other . . . . . . . . . .
Total of 1 & 2. . . . . . . . . . .
3. Capital paid in and reduced by
owners . . . . . . . . . . . .
(1). Capital paid in by owners .
(2). Amounts of share-based
payments recognized in
owners’ equity . . . . . .
(3). Other . . . . . . . . . .
4. Dividends. . . . . . . . . . .
(1). Appropriation of statutory
surplus reserves . . . . . .
(2). Appropriations to general
risk provisions . . . . . .
(3). Dividends to holders . . .
(4). Other . . . . . . . . . .
5. Internal carry-over of
shareholders’ equity . . . . . .
(1). Capitalized capital reserves .
(2). Capitalized surplus reserves
(3). Surplus reserves for making
up losses . . . . . . . . .
(4). General risk provisions for
making up losses . . . . .
(5). Other . . . . . . . . . .
IV. Balance at the end of year 2009 . .
Paid-in
capital
Capital
reserve
Less: shares
at hand
Statutory
reserves
Currency
translation
differences
General risk
reserves
Undistributed
profits
843,942.18
-4,373,725.00
—
— 9,498,681.10
— -4,069,200.34
—
—
Total equity
5,000,000.00
—
—
-307,487.76
304,524.66
—
—
—
—
(In thousands of Rmb)
391,053.05 3,571,173.63
—
—
—
—
5,000,000.00
-2,963.09
—
391,053.05
3,571,173.63
-3,529,782.82
—
5,429,480.76
—
—
-68,284.09
—
—
—
3.00
—
—
—
2,221,884.52
2,221,887.52
—
—
2,153,603.44
2,221,887.52
—
-73,292.92
—
—
—
—
—
-73,292.92
—
-97,723.90
—
—
—
—
—
-97,723.89
—
-105,382.03
—
—
—
—
—
-105,382.03
—
7,658.14
—
—
—
—
—
7,658.14
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
24,430.97
—
-73,292.92
—
—
—
—
—
—
—
—
—
—
—
2,221,887.52
—
—
—
24,430.97
—
2,148,594.60
—
—
5,008.84
—
—
—
—
—
—
—
—
—
—
—
5,008.84
—
—
—
—
—
5,008.84
—
—
—
—
—
—
3.00
—
—
—
—
—
-3.00
—
—
—
—
5,008.84
—
—
—
—
3.00
—
-3.00
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,000,000.00
—
—
-71,247.18
—
—
—
—
—
391,056.05
—
—
3,571,173.63
—
—
-1,307,898.30
—
—
—
—
—
7,583,084.20
— F-8 —
Notes to Consolidated Financial Statements
I.
Basis of Presenting Consolidated Financial Statements
China Eximbank prepares its consolidated financial statements in accordance with Accounting
Standards for Business Enterprises issued in 1992, Accounting System for Financial Institutions issued in
1993 and other related regulations (original accounting standards and system) issued by the Ministry of
Finance. Short-term and long-term foreign-currency bonds investment and long-term equity investment are
accounted for according to the Accounting Standards for Business Enterprises issued in 2006.
Since January 1, 2009, China Eximbank has adopted the Basic Standards and 38 specific standards
issued by the Ministry of Finance on February 15, 2006, and their implementation guidance, interpretations
and other related regulations issued by the Ministry of Finance, or, collectively, the ASBE. China
Eximbank has made retrospective adjustments to its consolidated financial statements for the year ended,
and as of, December 31, 2008 in accordance with these newly-adopted accounting standards. The
accounting policies and accounting estimates adopted by China Eximbank comply with the ASBE. The
management, based on historical experiences and other factors proved to be proper under specific
situations, made relevant judgments, estimates and assumptions in preparing the financial statements in
compliance with the ASBE. These judgments, estimates and assumptions will influence the application of
accounting policies, and the amounts presented as assets, liabilities, income and expenses. The actual
results may differ from the estimates. These estimates and related assumptions will be constantly reviewed.
The effects of revision to accounting estimates will be recognized at the current period and any affected
period thereafter.
Subsequent to the adoption of the ASBE, the following transactions and issues have been treated
pursuant to special accounting policies as follows:
On-lending loans of foreign governments
On-lending loans of foreign governments refer to sovereign loans borrowed from foreign
governments by the Ministry of Finance in the name of the PRC government. China Eximbank is entrusted
to lend the loans to domestic borrowers and is responsible for the drawdown and payment of the loans,
collection of the interests and expenses, and repayment, etc.
The on-lending projects could be classified into three types in accordance with different repayment
obligations:
Type One: The borrower is either a local provincial department of finance or a department of the
State Council, who is responsible for the loan repayment.
Type Two: The borrower is the company that implements the on-lending project and bears the
responsibility of the loan repayment. The local provincial department of finance or relevant department of
the State Council provides repayment guarantees for the project.
Type Three: The borrower is the company that implements the on-lending project and bears the
responsibility of the loan repayment. Neither the local provincial department of finance nor any department
of the State Council provides any repayment guarantee for the project. China Eximbank assesses the
project independently, on-lends on China Eximbank’s own accord, bears the risks and acts as the final
repayment party.
Pursuant to Caizhai (2000) No. 71 circular issued by the Ministry of Finance, the projects of type
three are self-conducted loans and are accounted on the accrual basis in the consolidated financial
statements, while the projects of type one and type two are agency transactions and are accounted on a cash
basis under a off-balance sheet. Profit and loss from the projects of type one and type two are brought
forward monthly in the income statement as commission income, interests income and expenses on
on-lending loans, and foreign exchange gains/losses on on-lending loans. Accumulated net profit or loss
is presented as “entrusted on-lending loans” under other current assets or other current liabilities at the
balance sheet date.
— F-9 —
General provision
The general provision of China Eximbank is set aside for unidentified potential loss. The specific
withdrawing appropriation or amount is determined in accordance with the regulations issued by the
relevant regulator.
Retirement benefit obligations
Pursuant to the applicable regulations, China Eximbank accounts for the supplemental retirement
benefits and early retirement benefits for retired employees on a cash basis.
China Eximbank’s consolidated financial statements relating to the year 2009 were its first-time
consolidated financial statements prepared in accordance with ASBE. The comparative information
relating to the year 2008 was adjusted retrospectively in accordance with the ASBE No. 38—First-time
Adoption of ASBE and Interpretation No. 1. The adjustments were as follows:
Financial instruments
China Eximbank uses derivative financial instruments such as forward foreign currency contracts,
currency swaps, interest rate swaps, cross-currency interest rate swaps and foreign exchange forwards to
manage assets and liabilities and operations.
(1) Pursuant to the original accounting standards and system, forward foreign currency contracts
and currency swaps were accounted for, at the transaction date, at the forward contract settlement amount
as forward receivables and payables in the balance sheet. Currency exposure arising from the swaps was
translated at the spot rate at the balance sheet date, and foreign exchange differences were presented as
“other receivables” in the balance sheet. Balance of other unsettled derivatives transactions was presented
off-balance sheet, and related profit/loss was recognized upon settlement.
According to ASBE, all derivatives of China Eximbank are measured at fair value.
(2) Pursuant to the original accounting standards and system, short-term bond investments were
measured at lower of cost or market price, long-term bond investments were measured at cost less
impairment, and long-term equity investments, other than those in subsidiaries, associates or joint
ventures, were measured at cost less impairment.
According to ASBE, all financial assets are classified into the following categories: “fair value
through profit or loss,” or FVTPL, including financial assets held for trading and those designated as
FVTPL at inception, “held-to-maturity,” or HTM, investments, “loans and receivables” and
“available-for-sale,” or AFS, financial assets. Carrying amount of FVTPL and AFS financial assets is
adjusted according to the fair value.
Impairment reserve of financial assets
Pursuant to the original accounting standards and system, China Eximbank accrued impairment
provisions for its loans in accordance with the regulation of “five-class classification for credit assets;” bad
debt provisions for receivables were accrued using aging analysis method; impairment reserve of all types
of investments was reviewed individually and measured at the difference between recoverable amount and
carrying amount, if the latter surpasses the former.
In accordance with ASBE, the difference between the carrying amount of HTM and loans and
receivables, which are measured at amortized cost, and the present value of their estimated future cash
flows is recognized as impairment loss.
Impairment of financial assets that are individually significant is assessed individually. Impairment
of financial assets with similar credit risk characteristics is assessed collectively.
Income taxes and deferred tax
Pursuant to the original accounting standards and system, income taxes were accounted for using tax
payable method.
— F-10 —
In accordance with ASBE, temporary differences arising from the difference between the carrying
amount of an asset or liability and its tax base are recognized as deferred tax assets and deferred tax
liabilities.
II.
Statement of Compliance
The consolidated financial statements of China Eximbank have been prepared in accordance with
ASBE, and present truly and completely China Eximbank’s financial position, results of operations, cash
flows and other relevant information.
III. Principal Accounting Policies and Accounting Estimates
China Eximbank’s consolidated financial statements relating to the year ended December 31, 2009
have been prepared in accordance with the following principal accounting policies and accounting
estimates in line with ASBE.
1.
Accounting year
China Eximbank’s accounting year is the calendar year, beginning on January 1 and ending on
December 31.
2.
Functional currency
Renminbi is the functional currency. Foreign currency transactions are accounted for by using duel
accounts system.
3.
Basis of accounting
China Eximbank’s consolidated financial statements are prepared on the accrual basis of accounting.
4.
Measurement principles
In the consolidated financial statements of China Eximbank, except for derivative financial
instruments, financial assets/liabilities at fair value through profit or loss, available-for-sale financial
assets which are measured at fair value, historical cost is adopted as the measurement principle.
Non-current assets classified as held-for-sale are measured at the lower of their carrying amounts and fair
value less costs to sell. Where assets are impaired, provisions for asset impairment are made in accordance
with the relevant requirements.
5.
Foreign currency translation
(1)
Translation of foreign currency transactions
Foreign currency transactions are translated into the functional currency using the spot exchange
rates at the dates of the transactions or a rate that approximates the exchange rates at the date of the
transaction. Exchange differences arising from the foreign currency transactions are recognized in profit
or loss for the current period.
At the balance sheet date, foreign currency monetary items are translated into functional currency
using the spot exchange rate at that date. Exchange differences of these items are recognized in profit or
loss for the current period, except for those exchange differences of monetary securities classified as
available-for-sale. Foreign currency non-monetary items carried at historical cost continue to be measured
at the amounts in functional currency translated using the spot exchange rates at the dates of the
transactions; foreign currency non-monetary items carried at fair value are translated using the spot
exchange rates at the date when the fair value was determined. Differences between the translated amount
and the original amount of functional currency are accounted for as changes in fair value and included in
profit or loss for the current period or in equity.
— F-11 —
(2)
Translation of foreign currency financial statements
China Eximbank translates the foreign currency to Renminbi when preparing the consolidated
financial statements. Assets and liabilities for each foreign currency for each balance sheet are translated
at the closing rate at the date of that balance sheet; all equity items, except “undistributed profits,” are
translated at the spot rates at the dates of the transactions; and income and expenses for each income
statement are translated at the spot rates at the dates of the transactions. All resulting exchange differences
are recognized as “currency translation differences,” a separate component of equity. Foreign currency
cash flows are translated at the spot rates at the transaction dates. Effect of foreign exchange rate changes
on cash and cash equivalents is presented separately in the statement of cash flows.
6.
Cash and cash equivalents
Cash comprises cash at hand, balances with central bank, demand placements with banks and other
financial institutions, and due from banks and other financial institutions with original maturity of less than
three months.
7.
Financial assets
(1)
Classification and measurement of financial assets
On initial recognition, financial assets are classified into the following four categories: financial
assets at FVTPL, held-to-maturity investments, loans and receivables, and AFS financial assets. The
classification of financial assets depends on China Eximbank’s intention and ability to hold them.
Financial assets are initially recognized at fair value. For financial assets at FVTPL, related transaction
costs are directly charged to the profit or loss for the current period; for financial assets classified as other
categories, related transaction costs are included in the initial recognition amounts.
a.
Financial assets at FVTPL
Financial assets at FVTPL include financial assets held for trading and those designated as FVTPL
at inception. A financial asset is classified as held for trading if: (1) it has been acquired principally for
the purpose of selling in the near future; or (2) it is part of a portfolio of identified financial instruments
that are managed together and for which there is evidence of a recent actual pattern of short-term
profit-making; or (3) it is a derivative. Financial assets at FVTPL are subsequently measured at fair value,
with all realized and unrealized gains or losses recognized in profit or loss for the current period. Interests
received during the period in which China Eximbank holds the financial assets at FVTPL are recognized
as interest income.
b.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities that China Eximbank has the positive intention and ability to hold to
maturity. Held-to-maturity investments are subsequently measured at amortized cost using the effective
interest method; gains or losses arising from derecognition, impairment or amortization are recognized in
profit or loss for the current period.
Other than sales or reclassifications due to a significant deterioration in the issuer’s creditworthiness,
whenever China Eximbank sells or reclassifies more than an insignificant amount of held-to-maturity
investments before maturity during the current financial year, any remaining held-to-maturity investments
will be reclassified as available-for-sale. China Eximbank will not classify any such financial assets as
held-to-maturity during the current financial year or during the two following financial years.
c.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Loans and receivables are subsequently measured at amortized cost
using the effective interest method. Gains or losses arising from derecognition, impairment or amortization
are recognized in profit or loss for the current period.
— F-12 —
d.
AFS financial assets
AFS financial assets are those non-derivative financial assets that are designated as available-for-sale
or are not classified as (1) financial assets at FVTPL, (2) loans and receivables, or (3) held-to-maturity
investments. AFS financial assets are subsequently measured at fair value.
A premium and a discount will be amortized using the effective interest method, and recognized as
interest income or expenses. Gains or losses arising from changes in fair value (other than impairment
losses and foreign exchange differences resulted from foreign currency monetary assets which are
recognized in profit or loss for the current period) are recognized as a separate component of capital
reserve, and are reversed and recognized in profit or loss for the period when such financial assets are
derecognized or impaired. Dividends or interests income related to the available-for-sale financial assets
are recognized in profit or loss for the current period.
(2)
Derecognition of financial assets
China Eximbank derecognizes a financial asset only when the contractual rights to receive the cash
flows from the financial asset expire or it transfers substantially all the risks and rewards of ownership of
the asset.
(3)
Measurement of fair value
Financial instruments are measured at fair value. The fair value of financial instruments (not
including derivatives) traded in active markets is based on its quoted market price. The quoted market price
is a price that is readily and regularly available from an exchange, dealer, broker, industry association,
pricing service, etc., and represents actual and regularly occurring market transactions on an arm’s-length
basis.
For all other financial instruments and derivatives not quoted in an active market, the fair value is
determined by using appropriate valuation techniques. Valuation techniques include making reference to
the prices from recent arm’s-length market transactions between knowledgable and willing parties, if
available, current fair value of another instrument that is substantially the same, discounted cash flow
analysis and option pricing models. The valuation techniques China Eximbank chooses are those generally
accepted by the market participants, and testified as being reliable by the past market transaction prices.
China Eximbank assesses the valuation techniques regularly and tests its effectiveness.
(4)
Impairment of financial assets
An assessment is made at each balance sheet date to determine whether there is objective evidence
of impairment of financial assets or group of financial assets other than those at FVTPL. If there is
objective evidence of impairment of financial assets as a result of one or more events that have occurred
after the initial recognition of those assets, or loss events, and if the loss events have an impact on the
estimated future cash flows of the financial assets or group of financial assets that can be reliably
estimated, the financial assets or group of financial assets are impaired and impairment losses are incurred.
Objective evidence that a financial asset or group of assets is impaired includes the following observable
loss events:
•
significant financial difficulty of the issuer or obligor;
•
a breach of contract, such as a default or delinquency in interest or principal payments;
•
China Eximbank, for economic or legal reasons relating to the borrower’s financial difficulty,
granting to the borrower a concession that China Eximbank would not otherwise consider;
•
it becoming probable that the borrower will enter into bankruptcy or other financial
reorganization;
•
disappearance of an active market for that financial asset because of financial difficulties of the
issuer;
— F-13 —
•
observable data indicating that there is a measurable decrease in the estimated future cash flows
from a group of financial assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial asset in the group, including
adverse changes in the payment status of borrowers in the group, a decrease in property prices
for mortgages in the relevant area, or adverse changes in industry conditions that affect the
borrowers in the group;
•
any significant change with an adverse effect that has taken place in the technological, market,
economic or legal environment in which the obligor operates, and indicates that the cost of
investments in equity instruments may not be recovered;
•
a significant or prolonged decline in the fair value of an investment in an equity instrument
below its cost; or
•
other objective evidence indicating there is an impairment of the financial asset.
a.
Financial assets carried at amortized cost
China Eximbank assesses individually whether objective evidence of impairment exists for loans and
receivables or held-to-maturity investments that are individually significant (amounts over Rmb 200
millions). If there is objective evidence that an impairment loss has been incurred, the carrying amount of
the asset is reduced to the present value of estimated future cash flows discounted at the original effective
interest rate, including the value of any relevant collaterals. The reduced amount is recognized as
impairment loss in profit or loss for the current period.
If the estimated future cash flows do not differ significantly from its present value for short term
loans and receivables or held-to-maturity financial assets, there is no need to use the discounted value
when determining the impairment of the assets. The present value of the estimated future cash flows of a
collateralized financial asset or receivable reflects the cash flows that reduce the costs for obtaining and
selling the collateral, whether or not repossession is possible.
China Eximbank includes, in a group of financial assets with similar credit risk characteristics,
similar loans and advances to customers that are not individually significant, or customer loans and
receivables having been individually assessed for impairment and found not to be impaired, and
collectively assesses them for impairment. If there is objective evidence that estimated future cash flows
of a certain type of financial assets reduce significantly after the initial recognition, impairment loss will
be recognized in profit or loss for the current period.
China Eximbank assesses the impairment losses of similar loans and advances to customers that are
not individually significant, or customer loans and receivables having been individually assessed for
impairment and found not to be impaired, by the Delinquency Flow Method, or the Migration Model. The
probability of default and historical loss experience are used as inputs to calculate the impairment loss. The
inputs are adjusted on the basis of current observable data to reflect the effects of current economic
conditions.
Receivables that are not individually significant or those having been individually assessed for
impairment and found not to be impaired are classified in different groups according to similar credit risk
characteristics. Impairment loss is calculated as certain percentages of the balances of these receivable
groups, and allowances for bad debts are determined accordingly. Specific percentages are as follows:
0 — 6 months (6 months included) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 months — 1 year (1 year included) overdue . . . . . . . . . . . . . . . . . . . .
Overdue over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0%
50%
100%
If, in a subsequent period, the amount of financial assets recovers and the recovery can be related
objectively to an event occurring after the impairment was recognized (such as an improvement in the
debtor’s credit rating), the previously recognized impairment loss will be reversed. The amount of the
reversal will be recognized in profit or loss for the current period. The reversal may not result in a carrying
amount of the financial asset exceeding what the amortized cost would have been had the impairment not
been recognized at the date the impairment is reversed.
— F-14 —
The impairment policy for financial assets carried at amortized cost is not applicable to the PRC
government concessional loans, preferential export buyer’s credits, and special state loans, whose
impairment loss is determined in accordance with their specific risk classification. The provision rates are
derived from the “five-category credit classification” as follows: normal class, 1%; watch class, 2%;
substandard class, 25%; doubtful class, 50%; and loss class, 100%.
When a loan is uncollectible, it is written off against the related allowance for impairment losses.
Such loans and receivables are written off after all the necessary procedures have been completed and the
amount of the loss has been determined. Subsequent recoveries of the amounts previously written off
decrease the amount of the impairment loss and are recognized in profit or loss for the current period.
Restructured loans are loan arising from renegotiation of the loan terms by China Eximbank and the
debtors with worsening financial position or possible default. China Eximbank assesses the impairment of
the restructured loans individually at the restructuring date. China Eximbank continuously reviews
restructured loans. If all criteria are met after the restructuring watch period, the restructured loans are no
longer regarded as impaired loans after approval.
b.
AFS financial assets
If there is objective evidence that AFS financial assets are impaired, accumulated losses due to
decreases in fair value previously recognized directly in capital reserve are reversed and charged to profit
or loss for the current period, even if the financial assets are not derecognized. The reversed accumulated
losses are the asset’s initial acquisition costs after deducting amounts recovered and amortized, current fair
value and impairment losses previously recognized in profit or loss.
If, in a subsequent period, the carrying amount of AFS debt instruments increases and the increase
can be related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment losses are reversed. The reversal will be recognized in profit or loss for the current
period. The reversal of impairment losses of AFS equity instruments is recognized in capital reserve, not
in profit or loss for the current period. Impairment losses incurred by investments in an unquoted equity
instrument (without a quoted price in an active market) whose fair value cannot be reliably measured are
not reversed.
(5)
Transfer of financial assets
China Eximbank derecognizes a financial asset when it transfers substantially all the risks and
rewards of ownership of the asset to the transferee, and China Eximbank does not derecognize a financial
asset when it retains substantially all the risks and rewards of ownership of the asset.
Where China Eximbank neither transfers nor retains substantially all risks and rewards of ownership
of the financial asset, (1) if it gives up the control of the financial asset, China Eximbank derecognizes the
financial asset and recognizes an asset and liability; or (2) if it does not give up the control of the financial
asset, China Eximbank continues to recognize the relevant financial asset to the extent of its continuing
involvement in the transferred asset, and recognizes a financial liability.
8.
Offsetting financial assets and financial liabilities in presentation
A financial asset and a financial liability are offset and the net amount is presented in the balance
sheet when China Eximbank has a legal right to set off the recognized amounts and the legal right is
currently enforceable; and China Eximbank intends either to settle on a net basis, or to realize the financial
asset and settle the financial liability simultaneously.
9.
Derivative financial instruments and embedded derivatives
China Eximbank uses derivative financial instruments such as forward foreign currency contracts and
interest rate swaps to hedge its risks associated with foreign currency and interest rate fluctuations. Such
derivative financial instruments are initially recognized at fair value on the date on which a derivative
contract is entered into and are subsequently measured at fair value. Fair value of derivatives are
determined by quoted prices in an active market (including recent market transaction prices) or valuation
models (including discounted cash flow analysis and option pricing models). Derivatives are carried as
— F-15 —
assets when the fair value is positive and as liabilities when the fair value is negative. Derivatives that are
linked to and must be settled by delivery of investments in equity instruments that do not have a quoted
market price in an active market and whose fair value cannot be reliably measured are measured at cost.
Certain derivatives are embedded in other financial instruments, such as a credit default derivative
which allows the issuer to transfer the credit risk of the bonds to another party embedded in the bonds.
Such embedded derivatives are treated as separate derivatives when their economic characteristics and
risks are not closely related to those of the host contract and the hybrid instrument is not carried at fair
value through profit or loss. These embedded derivatives are measured at fair value with the changes in
fair value recognized in the profit or loss for the current period, unless China Eximbank chooses to
designate the hybrid contracts as financial assets at FVTPL.
Certain derivative transactions, while providing effective economic hedges under China Eximbank’s
risk management positions, do not qualify for hedge accounting under ASBE 24 and are therefore treated
as derivatives held for trading with fair value changes recognized as “net gains (or losses) on fair value
changes.”
10.
Financial assets held under resale agreements and financial assets sold under repurchase
agreements
Transactions with resale agreements are transactions when China Eximbank purchases securities
from the counterparty according to the resale agreements and sells the same securities at a fixed price at
a future date. Transactions with repurchase agreements are transactions when China Eximbank sells
securities to the counterparty according to the repurchase agreements and repurchases the same securities
at a fixed price at a future date.
Considerations paid or received for financial assets held under resale agreements or financial assets
sold under repurchase agreements are recognized in the balance sheet. Assets purchased under agreements
to resell at a specified future date are not recognized, but recorded on the reference book. Assets sold under
agreements to repurchase at a specified future date continued to be presented in the balance sheet.
The interest income for resale agreements and interest expense for repurchase agreements are accrued
over the life of the agreements using the effective interest method.
11.
Long-term equity investment
(1)
Subsidiaries
The cost method is used to account for China Eximbank’s investment in subsidiaries. The investment
is adjusted by equity method when preparing the consolidated financial statements.
(2)
Associates and joint ventures
Associates are all entities over whose financial and operational decisions China Eximbank has
significant influence. Joint ventures exist where China Eximbank has a contractual arrangement with one
or more parties to undertake economic activities which are subject to joint control.
Investments in associates and joint ventures are initially recognized at cost and are accounted for
using the equity method of accounting. Unless China Eximbank has an obligation to assume liability or has
already made payments for the associates or the joint ventures, the losses of the associates and the joint
ventures are recognized to the extent of the carrying amount of the investment. China Eximbank recognizes
the investment gains or losses for the current period and adjusts the carrying amount of long-term equity
investment according to the share of the net profit or loss of the investee. Distributions or cash dividends
of the investee that belong to China Eximbank reduce the carrying amount of the long-term equity
investment when declared.
— F-16 —
Unrealized gains on transactions between China Eximbank and its associates and joint ventures are
eliminated to the extent of China Eximbank’s interests in the associates and joint ventures; unrealized
losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.
Accounting policies of associates and joint ventures will be adjusted when preparing the financial
statements to ensure consistency with the policies adopted by China Eximbank.
(3)
Long-term equity investment with no control, joint control or significant influence
Where China Eximbank does not have control, joint control or significant influence over the investee,
and the investment is not quoted in an active market and its fair value cannot be reliably measured, a
long-term equity investment is accounted for using the cost method.
(4)
For long-term equity investment accounted for using the cost method
Except for the cash dividends or distributions declared and not yet distributed included in the
consideration paid to acquire the investment, the cash dividend or distributions declared by the investee
that belong to the investor are recognized as investment gains, without considering whether the net profit
is realized before or after the investment.
12.
Fixed assets
China Eximbank’s fixed assets are tangible assets that are held for use in the supply of services, have
useful lives over one accounting year and high values per unit.
Fixed assets include buildings, equipment, motor vehicles and others. A fixed asset is initially
measured at cost. The cost of a purchased fixed asset comprises its purchase price, tariffs and any directly
attributable costs of bringing the asset to its present working condition and location for its intended use.
The cost of a self-constructed fixed asset comprises those expenditures necessarily incurred for bringing
the asset to working condition for its intended use. The cost of a fixed asset contributed by an investor is
determined in accordance with the value stipulated in the investment contract or agreement, except that,
when the value stipulated in the contract or agreement is not fair, fair value is used. A fixed asset that is
obtained under a finance lease is measured at the lower of the fair value of the leased asset and the present
value of the minimum lease payments, each determined at the inception of the lease.
Subsequent expenditure incurred on a fixed asset, such as repairs and maintenance cost,
dismantlement, removal and restoration costs, is included in the cost of the fixed asset, only if it meets the
recognition criteria of a fixed asset. The carrying amount of the replaced part is derecognized. Other
subsequent expenditure that fails to meet the recognition criteria of a fixed asset is recognized in profit or
loss in the period in which it is incurred.
China Eximbank provides depreciation for all its fixed assets other than fully depreciated fixed assets
that are still in use and land that is separately valued and accounted for. Depreciation is calculated on the
straight-line basis and expensed according to its use. The estimated useful lives, residual value rate and
depreciation rate of China Eximbank’s fixed assets are as follows:
Type of assets
Estimated useful lives
Estimated residual value rate
Depreciation rate/year
Buildings
Equipment
Motor vehicles
30-35 years
3-5 years
6 years
3%
3%
3%
2,77 - 3.23%
19.40 - 32.33%
16.17%
China Eximbank reviews the useful life and estimated net residual value and the depreciation method
applied at each financial year-end. A change in the useful life or estimated net residual value of a fixed
asset or the depreciation method used is accounted for as a change in an accounting estimate.
A fixed asset is derecognized upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or losses arising from selling, transferring, retiring or damaging the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset and
related tax expenses) are recognized in the profit or loss for the current period.
— F-17 —
13.
Construction in progress
Cost of construction in progress is determined as the expenditure is actually incurred for the
construction. Cost of self-operated construction includes direct materials, direct labor cost and direct costs
of equipment. Cost of outsourced construction is measured at contract price. Cost of installation
construction includes equipment, installation and test costs.
Items classified as construction in progress are transferred to fixed assets at an estimated value based
on the budgetary cost or actual cost when such assets are ready for their intended use. The depreciation
charge commences in the following month. The cost of fixed assets and depreciation are adjusted according
to the settlement value.
14.
Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or
controlled by China Eximbank, including computer software and other intangible assets. An intangible
asset is initially measured at cost. The cost is amortized on a straight-line basis over the estimated useful
life or validity period of the intangible asset with the amortization recognized in the profit or loss for the
current period from the date the asset is available for use. Intangible assets are presented net at acquisition
cost less accumulated amortization and impairment.
15.
Research and development
Expenditure on an internal research and development project is classified into expenditure on the
research phase and expenditure on the development phase according to its nature and whether there is
significant uncertainty that intangible assets will come into being. Expenditure on the research phase is
recognized in profit or loss for the period in which it is incurred. Expenditure on the development phase
is recognized as an intangible asset only when China Eximbank can demonstrate all of the following:
(1)
the technical feasibility of completing the intangible asset so that it will be available for use or
(2)
the intention to complete the intangible asset and use or sell it;
(3)
the existence of a market for the output of the intangible asset or the intangible asset itself;
sale;
(4) the availability of adequate technical, financial and other resources to complete the
development and the ability to use or sell the intangible asset; and
(5) its ability to measure reliably the expenditure attributable to the intangible asset during its
development phase.
Expenditure that fails to meet the criteria mentioned above is recognized in profit or loss for the
period in which it is incurred. Expenditure that was previously recognized as an expense will not be
recognized as an asset at a later date. Expenditure on the development phase that was capitalized is
presented as development expenditure in the balance sheet, and transferred to intangible assets when such
projects are ready for their intended use.
16.
Amortization of long-term deferred expense
Long-term deferred expense is expense incurred and amortized in a period longer than one year (one
year not included), such as organization cost, securities issuance expense, etc.
(1)
starts.
Organization cost incurred is recognized in profit or loss in the first month when operation
(2) Securities issuance expense is amortized on a straight-line basis over the validity period of the
securities.
(3) Other long-term deferred expense is amortized evenly over the period stipulated in the contract
or period of benefit.
— F-18 —
17.
Foreclosed assets
When recovering the impaired loans and receivables, China Eximbank may acquire ownership of the
foreclosed assets through legal procedures or at the borrower’s will. If China Eximbank intends to liquidate
and exempts the borrower from repaying loans, foreclosed assets are presented as “other assets.”
When China Eximbank recovers interest receivables by acquiring foreclosed assets, the foreclosed
assets are recognized at fair value. Related cost in acquiring the foreclosed assets, legal cost and other
costs are recognized as part of the carrying amount of the foreclosed assets. Foreclosed assets are presented
at carrying amount less impairment in the balance sheet. If, in a subsequent period, the amount of
foreclosed assets recovers and the recovery can be related objectively to an event occurring after the
impairment was recognized, the previously recognized impairment loss shall be reversed. The amount of
the reversal shall be recognized in profit or loss for the current period.
18.
Impairment of non-financial assets
China Eximbank assesses at each balance sheet date whether there is any indication that fixed assets,
intangible assets with a finite useful life and long-term equity investment may be impaired. If there is any
indication that an asset may be impaired, the recoverable amount is estimated and impairment test is
conducted.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present
value of the future cash flows expected to be derived from the asset. The recoverable amount is estimated
for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset,
China Eximbank determines the recoverable amount of the asset group to which the asset belongs.
Identification of an asset group shall be based on whether major cash inflows generated by the asset group
are largely independent from the cash inflows generated by other assets or asset groups.
If the recoverable amount of an asset is less than its carrying amount, China Eximbank reduces the
carrying amount to its recoverable amount. The difference is recognized as an impairment loss and charged
to profit or loss for the current period. Once an impairment loss on above mentioned assets is recognized,
it shall not be reversed in a subsequent period.
19.
Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified as either financial liabilities at FVTPL or
“other financial liabilities.” For financial liabilities at FVTPL, related transaction costs are directly
charged to the profit or loss for the current period; for financial liabilities classified as other financial
liabilities, related transaction costs are included in the initial recognition amounts.
(1)
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading
or originally designated as at FVTPL. A financial liability is classified as held for trading if (1) it is
acquired or incurred principally for the purpose of selling or repurchasing it in the near term; (2) if it is
part of a portfolio of identified financial instruments that are managed together and for which there is
evidence of recent actual pattern of short-term profit-making; or (3) derivatives, except for a derivative
that is a designated and effective hedging instrument, or a financial guarantee contract, or a derivative that
is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from
an active market) whose fair value cannot be reliably measured. Financial liabilities at FVTPL are
subsequently measured at fair value, with all realized and unrealized gains or losses recognized in profit
or loss for the current period.
(2)
Other financial liabilities
Other financial liabilities are initially recognized at fair value net of transaction costs. Other financial
liabilities are subsequently measured at amortized cost using the effective interest method.
— F-19 —
20.
Provision
An obligation related to a contingency is recognized as a provision when all of the following
conditions are satisfied: (1) the obligation is a present obligation of China Eximbank; (2) it is probable that
an outflow of economic benefits will be required to settle the obligation; and (3) the amount of the
obligation can be measured reliably. For obligation balances arising from the letter of credit or letter of
guarantee issued off-balance sheet, China Eximbank assesses if there’s any indication that impairment is
occurred according to the similar financial assets in the balance sheet and accrues off-balance sheet credit
risks provision.
A provision is initially measured at the best estimate of the expenditure required to settle the related
present obligation, taking into account the factors pertaining to a contingency such as the risks,
uncertainties and time value of money. China Eximbank reviews the carrying amount of a provision at each
balance sheet date. Where there is clear evidence that the carrying amount of a provision does not reflect
the current best estimate, the carrying amount shall be adjusted to the current best estimate.
China Eximbank follows similar impairment policy to recognize provision for letter of guarantee and
letter of credit issued off-balance sheet.
21.
Employee benefits
Employee benefits are all forms of consideration given and other relevant expenditures incurred by
China Eximbank in exchange for service rendered by employees. In the accounting period in which an
employee has rendered services, China Eximbank recognizes the employee benefits payable for those
services as a liability, and recognizes relevant asset or expense for the current period.
(1)
Social welfare
According to the relevant regulations, China Eximbank adopts the social welfare policy for
government sponsored institutions. Employees of the headquarters of China Eximbank are enrolled in
unemployment insurance schemes. Some branches are enrolled in local social welfare schemes according
to the local policies. Expenditure related to payments for employees’ social welfare is included in profit
or loss for the period in which such expenditure is incurred.
(2)
Retirement benefits
According to the regulations issued by the Ministry of Finance, expenditure related to pension and
benefits for retired employees is included in profit or loss for the period in which such expenditure is
incurred.
(3)
Housing funds and subsidy
Pursuant to the relevant regulations, all employees of China Eximbank participate in various local
housing funds schemes administered by local governments. China Eximbank contributes on a monthly
basis to these funds based on certain percentages of the salaries of the employees. These payments are
recognized in profit or loss for the period in which they are incurred.
China Eximbank provides housing subsidies to applicable employees. Housing subsidies are
recognized in profit or loss for the period in which they are disbursed.
22.
Fiduciary activities
China Eximbank acts as a custodian, trustee or agent in fiduciary activities. The assets held for
fiduciary activities and commitments to return the assets to the customers are not included in the balance
sheet of China Eximbank, and risks and rewards of these assets are the responsibility of the customers.
Entrusted loans are loans funded by a consigner, and China Eximbank grants loans to borrowers at
the direction of the consigner with regard to the borrower, purpose, amounts, term, interest rates, etc. China
Eximbank is entrusted to make payment to the borrower, supervise the use of the loans and assist in
collecting these loans. The consigner bears the risk. China Eximbank charges a commission related to the
entrusted loans, and neither presents the entrusted loans in the balance sheet nor accrues impairment
provision for such loans.
— F-20 —
23.
Recognition of income and expenses
(1)
Interest income and expense
Interest income or expense of the financial assets or financial liabilities measured at amortized cost
is calculated using effective interest method on an accrual basis.
The effective interest method is a method of calculating the amortized cost of financial assets or
financial liabilities, and of allocating the interest income or interest expense over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through
the expected life of the financial instrument to the net carrying amount of the financial asset or financial
liability. When estimating the future cash flows, China Eximbank considers all contractual terms of
financial instruments, but without considering future credit losses. The calculation includes all transaction
costs, discounts and premiums that are an integral part of the effective interest rate.
If the financial assets are impaired, relevant interest income is calculated using the discount rate of
future cash flows for measuring the impairment losses.
(2)
Fees and commission income
Fees and commission income is recognized on an accrual basis when the service is provided.
Loan commitment fees and related direct cost relevant to possible loans are deferred and recognized
as an adjustment to the effective interest rate of the loans. When all the loans for a syndication group are
issued, and China Eximbank itself does not retain any loans or retain some loans only at the same effective
interest rate as other members of the syndication, fees of the syndication loans are recognized as income.
When China Eximbank provides services independently or participates in services to a third party
regarding business mergers, acquisitions and transfer, and issuance of securities, commissions received are
recognized when the transaction is consummated. Fees relating to asset management, other management
advisory services and financial guarantee are normally recognized over a period according to a percentage
agreed in the contract.
(3)
Exchange gains or losses
Exchange gains or losses arise mainly from the exchange difference of foreign currency exposure
translated at fluctuated exchange rate.
(4)
Fiscal subsidy
Fiscal subsidies are policy-related funding support provided by upper-level government financial
departments. Fiscal subsidies are recognized as income when acquired or criteria attached are satisfied.
24.
Income taxes
Income taxes comprise current income taxes and deferred tax. Income taxes are included in profit or
loss for the current period, except for those related to transactions or events directly recognized in owners’
equity, which are recognized directly in owners’ equity.
Taxable profits, which are the basis for calculating the current tax expenses, are determined after
adjusting the accounting profits before tax for the year in accordance with relevant requirements of tax
laws.
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods
are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
Temporary differences arising from the difference between the carrying amount of an asset or
liability and its tax base, or the difference between the tax base and the carrying amount of those items
that are not recognized as assets or liabilities but have a tax base that can be determined according to tax
laws, are recognized as deferred tax using the balance sheet liability method.
— F-21 —
China Eximbank recognizes deferred tax liabilities for all taxable temporary differences, except for
the following taxable temporary differences:
(1) Taxable temporary differences arise from the following transactions: (a) the initial recognition
of goodwill; and (b) the initial recognition of an asset or liability in a transaction which neither is a
business combination nor affects accounting profit or taxable profit (or deductible loss) at the time of the
transaction.
(2) For taxable temporary differences associated with investments in subsidiaries, associates and
joint ventures, China Eximbank is able to control the timing of the reversal of the temporary difference and
it is probable that the temporary difference will not reverse in the foreseeable future.
China Eximbank recognizes deferred tax assets to the extent that it is probable that taxable profits
will be available against which the deductible temporary differences, deductible losses and tax credits can
be utilized, except for the following:
a.
Deductible temporary differences arise from a transaction which is neither a business
combination nor affects accounting profit or taxable profit (or deductible loss) at the time of the
transaction.
b.
For deductible temporary differences associated with investments in subsidiaries, associates
and joint ventures, if it is probable that the temporary difference will reverse in the foreseeable future and
it is probable that taxable profits will be available in the future, against which the temporary difference
can be utilized, China Eximbank recognizes the corresponding deferred tax asset.
At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates
that are expected to apply to the period when the asset is realized or the liability is settled, according to
the requirements of tax laws, and reflect the tax effect of the expected realization of asset and settlement
of liability.
At the balance sheet date, China
If it is probable that sufficient taxable
of the deferred tax asset to be utilized,
amount of reduction is reversed to the
be available.
25.
Eximbank reviews the carrying amount of any deferred tax asset.
profits will not be available in future periods to allow the benefit
the carrying amount of the deferred tax asset is reduced. Any such
extent that it becomes probable that sufficient taxable profits will
Leases
(1) Classification of leases: A finance lease is a lease that transfers in substance all the risks and
rewards incidental to ownership of an asset. An operating lease is a lease other than a finance lease.
(2) Finance lease: When China Eximbank is a leaser under finance leases, the minimum lease
payment receivable from the lessee is recognized as a receivable and presented as “loans and advances”
at the inception of the lease. Unguaranteed residual value is recognized in the meantime. The difference
between the receivable and unguaranteed residual value and the present value of the receivable is
recognized as unearned finance income. Unearned finance income shall be allocated over the lease term
using the effective interest method.
(3) Operating lease: When China Eximbank is the lessee under an operating lease, rental expenses
are charged in “Operating and management expenses” in the income statement on a straight-line basis over
the lease term. When China Eximbank is the leaser under operating leases, the assets subject to the
operating lease are accounted for as China Eximbank’s assets. Rental income is recognized as “other
operating income” in the income statement on a straight-line basis over the lease term.
— F-22 —
26.
Contingent liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will
only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly
within the control of China Eximbank. It can also be a present obligation arising from past events that is
not recognized because it is not probable that an outflow of economic resources will be required or the
amount of obligation cannot be measured reliably.
Contingent liabilities are not recognized as provisions. They are disclosed in the notes to the
consolidated financial statements. They are recognized as provisions only when it is probable that an
outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can
be measured reliably.
27.
Segment reporting
China Eximbank discloses segment information geographically. A geographical segment is a
distinguishable component of China Eximbank that is engaged in providing products and services within
a particular economic environment that is subject to risks and returns that are different from those of
segments operating in other economic environments.
28.
Preparation of consolidated financial statements
The scope of consolidation is China Eximbank and all its subsidiaries.
The dates on which China Eximbank obtains or loses control of its subsidiaries are considered as the
acquisition date and the date of disposal. Subsidiaries acquired through a business combination involving
enterprises under common control are consolidated since they and China Eximbank are commonly
controlled by the controlling party. Their net profit obtained before the consolidation date is presented as
a separate line item in the consolidated income statement.
If the accounting policies or accounting periods of the subsidiaries are different from those of China
Eximbank, when preparing the consolidated financial statements, China Eximbank makes necessary
adjustments to the financial statements of the subsidiaries based on its own accounting policies and
accounting periods. Where a subsidiary has been acquired through a business combination not involving
enterprises under common control, the subsidiary’s financial statements are adjusted according to the fair
value of identifiable net assets at the acquisition date.
All significant intergroup accounts, transactions and unrealized profit between China Eximbank and
its subsidiaries are eliminated on consolidation. The portion of a subsidiary’s owner’s equity that is not
attributable to the parent is treated as minority interests and presented in the consolidated balance sheet
as owner’s equity, and in the consolidated income statement below the “net profit” line item.
29.
Business combination
Where a subsidiary has been acquired through a business combination not involving enterprises
under common control, the cost of an acquisition and the identifiable net assets acquired in the
combination are measured as the fair value at the acquisition date. The excess of the cost of acquisition
over the fair value of China Eximbank’s share of the identifiable net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired,
the difference is recognized directly as profit or loss for the current period.
30.
Critical accounting policies and judgments
China Eximbank reviews regularly critical estimates and assumptions, which are based on historical
experiences of China Eximbank’s management as well as other factors, including reasonable anticipation
for the future issues. Critical estimates and assumptions, which most likely affect the carrying amounts of
next year’s assets and liabilities, are set out below. When there is a huge gap between the reality and the
following accounting estimates and judgments, China Eximbank will make reasonable adjustment
according to the facts.
— F-23 —
(1)
Impairment allowances on loans and advances
China Eximbank reviews its loan portfolio to assess impairment on a periodic basis, and evaluate the
impairment loss when impairment is incurred. Objective evidence for impairment includes observable data
indicating that there is a measurable decrease in the estimated future cash flows for an individual loan or
advance, observable data indicating that there has been an adverse change in the payment status of
borrowers or issuers, or national or local economic conditions that correlate with defaults on assets in the
portfolio.
Impairment loss for individual loans and advances is the net reduction in the present value of
expected future cash flows.
In addition to the assessment of identifiable impairment of the individual loans, China Eximbank
assesses the impairment of loan groups periodically. Indications for impairment that causes the reduction
of expected cash flows include adverse changes in the payment status of borrowers in the group or adverse
changes in economic conditions that affect the borrowers in the group. China Eximbank estimates the
impairment loss of the loan groups with impairment indications based on historical experience of assets
loss with similar credit risk characteristics. The methodology and assumptions used for estimating both the
amount and timing of future cash flows are reviewed regularly to narrow the gap between estimated loss
and actual loss.
(2)
Impairment of AFS financial assets
China Eximbank follows the guidance of ASBE 8—Impairment of Assets and ASBE 22—Financial
Instruments: Recognition and Measurement to determine if AFS financial assets are impaired, and the final
judgment heavily relies on the decision of top management. In making this judgment, China Eximbank
evaluates the duration and extent to which the fair value of an investment is less than its cost, and the
financial health of the underlying assets (such as probability of default and loan loss coverage), financial
position and near-term business outlook for the investee, including factors such as industry and sector
performance, and credit ratings.
(3)
Fair value of financial instruments
China Eximbank establishes fair value of financial instruments with reference to a quoted market
price in an active market or, if there is no active market, using valuation techniques. These valuation
techniques include the use of recent arm’s length transactions, observable prices for similar instruments,
discounted cash flow analysis using risk-adjusted interest rates, and commonly used market pricing
models. Valuation models applied to determine fair value of derivatives and other financial instruments use
observable market inputs and data including, for example, interest rate yield curves and foreign currency
rates. The results of using valuation techniques are calibrated against industry practice and observable
current market transactions in the same or similar instruments.
With respect to large-scale financing transactions under the guidance of Chinese government’s
policy, fair value is determined by using the stated terms of the related instrument while consulting terms
determined in similar transactions engaged in or directed by Chinese government, for there are no other
relevant market prices or yields available reflecting arm’s length transactions of a comparable scale and
period.
China Eximbank revises the valuation scope according to the operational strategy and risk
management policies. Valuation techniques and models are updated in accordance with the establishment
and improvement of risk quantification and assessment system.
(4)
Held-to-maturity investments
China Eximbank classifies non-derivative financial assets with fixed or determinable payments and
fixed maturity as held-to-maturity investments. This classification requires significant judgment. In
making this judgment, China Eximbank evaluates its intention and ability to hold such investments to
maturity. If China Eximbank’s judgment differs from the reality, it will be required to reclassify the entire
portfolio of assets as available-for-sale.
— F-24 —
(5)
Income taxes
There are many transactions and calculations for which the ultimate tax is uncertain during the
ordinary course of business. China Eximbank assesses the tax effect of all transactions prudently and
calculates relevant income tax. The Corporate Income Tax Law of the Peoples’ Republic of China, or the
CIT Law, took effect on January 1, 2008. However, there are many transactions and calculations for which
the ultimate tax is uncertain during the ordinary course of business, because the supplementary legislation
under the CIT Law is not finalized. China Eximbank has made judgment on whether impairment loss
should deduct taxable income by taking into account existing tax legislation and past practice. Where the
final tax outcome of these matters is different from the amounts that were initially recorded, such
differences will impact the income tax and deferred income tax for the period when the tax amount is
determined.
China Eximbank recognizes deferred tax assets in accordance with deductible temporary differences
and deductible losses. China Eximbank assesses the judgment on deferred income tax continuously, and
recognizes deferred tax assets to the extent that it is probable that taxable profits will be available in the
future.
IV.
Changes in Accounting Policies, Accounting Estimates and Other Revisions
1.
First-time adoption of Accounting Standards for Business Enterprises
The effects on the net profit and owners’ equity of China Eximbank caused by the differences of
ASBE and the original accounting standards and system are listed as follows:
Since January 1, 2009, China Eximbank has adopted ASBE. China Eximbank made retrospective
adjustments to the financial statements of the comparative year in accordance with the ASBE 18—Income
Taxes, ASBE 28—Changes in Accounting Policies and Accounting Estimates and Correction of Errors,
ASBE 38—First-time Adoption of Accounting Standards for Business Enterprises. Differences of the net
profit and owners’ equity of China Eximbank for the year of 2008 before and after the adjustment are set
out below:
(1)
Adjustment of net profit
Items
Year of 2008
Amount presented as of the year 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
199,607,173.87
-169,603,278.39
Amount presented according to the original accounting standards and
system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,003,895.48
Adjustment:
Accrue allowances for bad debt . . . . . . . . . . . . . . . . . . . .
Adjustment for derivative financial instruments . . . . . . . . .
Effect of AFS investment and HTM investment adjustment
Effect of securities issuance adjustment. . . . . . . . . . . . . . .
Accrue impairment provision for loans . . . . . . . . . . . . . . .
Contingency liability for off-balance sheet assets . . . . . . . .
Adjustment for foreign paid-in capital translation . . . . . . .
Adjustment for fund operation . . . . . . . . . . . . . . . . . . . . .
Other adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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33,446,996.53
503,556,110.42
81,535,576.24
28,034,339.71
1,179,877,060.93
-26,445,566.06
-145,802,231.19
631,506,498.10
-267,438.48
-93,557,722.31
Amount presented according to ASBE . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,221,887,519.37
— F-25 —
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(2)
Adjustment of owners’ equity
Items
December 31, 2008
Amount presented as of year 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,466,409,557.24
-169,603,278.39
Amount presented according to the original accounting standards and
system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,296,806,278.85
Adjustment:
Accrue allowances for bad debt . . . . . . . . . . . . . . . . . . . .
Adjustment for derivative financial instruments . . . . . . . . .
Effect of AFS investment and HTM investment adjustment
Effect of securities issuance adjustment. . . . . . . . . . . . . . .
Accrue impairment provision for loans . . . . . . . . . . . . . . .
Contingency liability for off-balance sheet assets . . . . . . . .
Adjustment for foreign paid-in capital translation . . . . . . .
Adjustment for fund operation . . . . . . . . . . . . . . . . . . . . .
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
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-14,488,444.47
312,264,838.14
194,829,355.31
42,933,949.90
-3,030,636,503.17
-1,058,926,480.52
Amount presented according to ASBE . . . . . . . . . . . . . . . . . . . . . . . . . .
7,583,084,200.19
369,618,732.53
1,470,682,473.62
Other revisions
(1) According to the Written Reply On China Eximbank’s Financial Accounting Results of the Year
2008 by the Ministry of Finance, the expense of the year 2008 is reduced by Rmb 14,243,734.03, net profit
of the year 2008 is increased by Rmb 14,243,734.03, undistributed profits at the beginning of 2009 is
increased by Rmb 14,243,734.03; legal surplus reserve of Rmb 3,000,389.55 is accrued, and undistributed
profit at the beginning of 2009 is reduced by Rmb 3,000,389.55.
(2) According to the income tax levied in the year 2008, net profit of the year 2008 is reduced by
Rmb 183,847,012.42, undistributed profit at the beginning of 2009 is reduced by Rmb 183,847,012.42.
V.
Taxation
The principal taxes and tax rates to which China Eximbank is subject to are listed below:
Tax/fee
Tax/fee basis
Tax/fee rate
Business tax
City Construction Tax
Education surcharges
Income taxes
Taxable financial operations income
Business tax
Business tax
Taxable income
5%
7%
3%
25%
According to the regulation of Guoshuifa [2008] 28 circular and Guoshuihan [2004] 996 circular,
income tax of China Eximbank is paid on an aggregated basis by the headquarters at period end, and
business tax is paid separately by the headquarters and branches.
Yinding Holdings Ltd, a subsidiary of China Eximbank located in Hong Kong SAR, calculates and
pays its taxes in accordance with local taxation regulations.
— F-26 —
VI. Contingencies and Major Off-balance Sheet Items
1.
Legal proceedings
Up until December 31, 2009, there were no legal proceedings with significant influence over China
Eximbank’s financial position and operating results.
2.
Capital commitments
China Eximbank participated in the establishment of China-Italy Small and Medium Sized
Enterprises Fund, or Mandarin Fund, which has a total size of =C 323.75 million. China Eximbank is
committed to subscribe for fund units in an amount of =C 75 million. Up until December 31, 2009, China
Eximbank had paid a subscription amount of =C 23,139,840.00. The remaining amount will be paid before
April 2012 pursuant to the contract.
China Eximbank is committed to invest Rmb 290 million in Guoke Ruihua Venture Capital. Up until
December 31, 2009, China Eximbank had made payment of Rmb 145 million, and the remaining amount
will be paid before July 2013.
The registered capital of Xi’an Kangben Materials LLC is Rmb 600 million, and will be paid
separately in two installments. China Eximbank is committed to pay Rmb 270 million. Up until December
31, 2009, China Eximbank had paid the first installment of Rmb 112.5 million. The timing of the second
installment depends on the progress of the invested project.
The registered capital of Chengdu Investment Holding Group Co., Ltd, or CDIH, is Rmb 1.5 billion,
and will be paid separately in three installments. China Eximbank is committed to pay Rmb 750 million.
Up until December 31, 2009, China Eximbank had paid the first installment of Rmb 250 million. The
timing of the second installment depends on the progress of the venture capital’s investment project.
3.
Credit commitments
Balance at
the year end
Items
Letters of guarantee issued . .
Letters of credit issued . . . . .
Bank bill acceptance . . . . . . .
Irrevocable loan commitments
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Balance at
the beginning
of the year
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4,828,039,353.96
3,347,087,812.33
. 147,542,183,836.16 133,334,141,232.10
.
1,957,609,333.25
835,631,128.14
. 255,699,391,066.86 135,654,036,829.45
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,027,223,590.23 273,170,897,002.02
4.
Operating leases commitments
China Eximbank’s major operating lease commitment is the operating lease of Chemsunny World
Trade Center as office building since March 2008. The lease term is 3 years. Up until December 31, 2009,
China Eximbank had a remaining lease term of 14 months with an operating lease commitment of Rmb
211,277,299.95.
Balance at
the year end
Balance at
the beginning
of the year
Enterprise short-term financing bills. . . . . . . . . . . . . . . .
190,000,000.00
270,000,000.00
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
190,000,000.00
270,000,000.00
Items
— F-27 —
VII. Balance Sheet of On-lending Loans of Foreign Governments
As of December 31,
2009
(in thousands of Rmb)
ASSETS
Due from Banks . . . . . . . . . . . . . . . . . . . . . .
Accounts Receivable . . . . . . . . . . . . . . . . . . .
Interest Receivable . . . . . . . . . . . . . . . . . . . .
On-lent Foreign Government Loans . . . . . . . .
Less: Provision for Doubtful Debt in Loans.
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2,067,346
8,935,147
1,786,536
148,666,726
308,213
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
161,147,542
LIABILITIES
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings of Foreign Government Loans . . . . . . . . . . . . . . . . . . . . . . . . . .
965,598
160,024,547
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
160,990,145
OWNER’S EQUITY
Undistributed Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
157,397
Total Owner’s Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
157,397
Total Liabilities and Owner’s Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
161,147,542
— F-28 —
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TERMS AND CONDITIONS OF THE BONDS
The following are the terms and conditions substantially in the form in which they will be endorsed
on the definitive bonds and referred to in the global bond. The terms and conditions and the global bond
will be issued in the English language, which shall prevail over any Chinese language translation in the
event of conflict or discrepancy.
The Securities and Futures Commission takes no responsibility for the contents of this section. The
authorization of this offering circular by the Securities and Futures Commission does not imply the
Securities and Futures Commission’s endorsement or recommendation of the terms and conditions of the
bonds as set out in this section.
Rmb 2.65 per cent. bonds due 2013 (the “Bonds”) of The Export-Import Bank of China (“China
Eximbank”) are the subject of a fiscal agency agreement dated on or about November 26, 2010 (the
“Fiscal Agency Agreement”) between China Eximbank, Bank of China (Hong Kong) Limited as
calculation agent (the “Calculation Agent”, which expression includes any successor calculation agent
appointed from time to time in connection with the Bonds), the fiscal agent and principal paying agent (the
“Fiscal Agent”, which expression includes any successor Fiscal Agent appointed from time to time in
connection with the Bonds, and together with any successor or additional paying agents appointed from
time to time in connection with the Bonds, the “Paying Agents”). References herein to the “Agents” are
to the Paying Agents and the Calculation Agent and any reference to an “Agent” is to any one of them.
The Fiscal Agency Agreement includes the form of the Bonds and the coupons relating to them (the
“Coupons”). Copies of the Fiscal Agency Agreement are available for inspection during normal business
hours at the specified offices of the Fiscal Agent. The holders of the Bonds (the “Bondholders”) and the
holders of the Coupons (whether or not attached to them) (the “Couponholders”) are deemed to have
notice of all the provisions of the Fiscal Agency Agreement applicable to them.
1
Form, Denomination and Title
The Bonds are in bearer form in the denomination of Rmb 10,000, and with Coupons attached at the
time of issue. Title to the Bonds and the Coupons will pass by delivery. The holder of any Bond or Coupon
shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or
not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing
thereon or any notice of any previous loss or theft thereof) and no person shall be liable for so treating such
holder.
2
Status
The Bonds constitute direct, unconditional, unsubordinated and, subject to the creation of any
security permitted or approved in accordance with Condition 3 (Negative Pledge), unsecured obligations
of China Eximbank. The Bonds will at all times rank pari passu among themselves and at least pari passu
with all other existing and future unsubordinated and unsecured Public External Indebtedness (as defined
in Condition 3 (Negative Pledge)) of China Eximbank from time to time outstanding.
3
Negative Pledge
So long as any of the Bonds remains outstanding, China Eximbank shall not create or permit to
subsist any Security Interest on any of its present or future assets or revenues to secure the payment of,
or any guarantee or indemnity in respect of, any Public External Indebtedness unless the Bonds are secured
by such Security Interest pari passu with such other Public External Indebtedness. This provision,
however, will not apply to any (i) security interest on any property or asset existing at the time of
acquisition of such property or asset or to secure the payment of all or any part of the purchase price or
construction cost thereof or to secure any indebtedness incurred prior to, or at the time of, such acquisition
or the completion of construction of such property or asset for the purpose of financing all or any part of
the purchase price or construction cost thereof, (ii) any security interest in existence on December 2, 2010
to the extent that it secures any Public External Indebtedness outstanding on such date, or (iii) any lien
arising by operation of law.
— A-1 —
In these Conditions:
“Accountholder” means each person who is for the time being shown in the records of the CMU
Operator as the holder of a particular principal amount of the Bonds;
“CMU Operator” means the Hong Kong Monetary Authority as operator of the Central
Moneymarkets Unit Service;
“Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of
China;
“Macau” means the Macau Special Administrative Region of the People’s Republic of China;
“Person” means any individual, company, corporation, firm, partnership, joint venture, association,
organisation, state or agency of a state or other entity, whether or not having separate legal personality;
“PRC” or “China” means the People’s Republic of China excluding Hong Kong, Macau and Taiwan;
“Public External Indebtedness” means any indebtedness of China Eximbank for money borrowed
or any guarantee or indemnity by China Eximbank of indebtedness for money borrowed which, in either
case, (i) has an original maturity of more than 365 days and (ii) is in the form of or represented by any
bond, note, debenture, debenture stock, loan stock, certificate or other instruments which is, or is capable
of being, quoted, listed or traded on any stock exchange or over-the-counter or other similar securities
market outside the PRC (without regard, however, to whether or not such instruments are sold through
public offerings or private placements); provided that public external indebtedness shall not include any
such indebtedness for borrowed money owed to any financial institution in the PRC; and
“Security Interest” means any mortgage, charge, pledge, lien or other security interest including,
without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction.
4
Interest
(a)
Accrual of interest and payments: The Bonds bear interest from December 2, 2010 (the “Issue
Date”), payable semi-annually in arrear on June 2 and December 2 in each year (each, an
“Interest Payment Date”); provided that if any Interest Payment Date would otherwise fall on
a day which is not a business day, it shall be postponed to the next day which is a business day
unless it would thereby fall into the next calendar month in which event it shall be brought
forward to the immediately preceding business day. Each period beginning on (and including)
the Issue Date or any Interest Payment Date and ending on (and excluding) the next Interest
Payment Date is herein referred to as an “Interest Period”. In these Conditions, “business
day” means any day (other than a Sunday or a Saturday) on which commercial banks in Hong
Kong are open and settle Renminbi payments and banks in Beijing, PRC are not authorised or
obligated by law or executive order to be closed.
(b)
Cessation of interest: Each Bond will cease to bear interest from the due date for redemption
unless, upon due presentation, payment of principal is improperly withheld or refused, in which
case it will continue to bear interest at such rate (both before and after judgment) until
whichever is the earlier of (i) the day on which all sums due in respect of such Bond up to that
day are received by or on behalf of the relevant Bondholder and (ii) the day which is seven days
after the Fiscal Agent has notified the Bondholders that it has received all sums due in respect
of the Bonds up to such seventh day (except to the extent that there is any subsequent default
in payment).
(c)
Rate of Interest: The Bonds bear interest at 2.65 per cent. per annum and references to “Rate
of Interest” in these Conditions shall be to the rate of interest applicable to the Bonds in
question.
(d)
Calculations of Interest: The amount of interest payable in respect of Bonds for any Interest
Period (the “Interest Amount”) shall be calculated by multiplying the Rate of Interest, the
principal amount of such Bonds and the actual number of days elapsed in such Interest Period
— A-2 —
and then dividing the product thereof by 365 (half a cent being rounded upwards). The
Calculation Agent shall notify China Eximbank, the Paying Agents and the Bondholders, of the
Interest Amount payable in respect of the Bonds on the business day prior to the relevant
Interest Payment Date for each Interest Period.
5
6
7
Redemption and Purchase
(a)
Scheduled Redemption: Unless previously redeemed, or purchased and cancelled, the Bonds
will be redeemed at their principal amount on December 2, 2013.
(b)
No Other Redemption: China Eximbank shall not be entitled to redeem the Bonds otherwise
than as provided in Condition 5(a) (Scheduled redemption) above.
(c)
Purchase: Subject to applicable laws and regulations, China Eximbank may at any time
purchase Bonds in the open market or otherwise and at any price, provided that all unmatured
Coupons are purchased therewith. Any Bonds purchased by China Eximbank may, at their
discretion, be held, resold or surrendered to the Fiscal Agent for cancellation.
(d)
Cancellation: All Bonds redeemed by China Eximbank and any unmatured Coupons attached
to or surrendered with them shall be cancelled and may not be reissued or resold.
Payments
(a)
Principal: Payments of principal shall (subject as provided below) be made in Renminbi only
against presentation and (provided that payment is made in full) surrender of Bonds at the
specified office of any Paying Agent.
(b)
Interest: Payments of interest shall (subject as provided below) be made in Renminbi only
against presentation and (provided that payment is made in full) surrender of the appropriate
Coupons at the specified office of any Paying Agent.
(c)
Payments Subject to Fiscal Laws: All payments in respect of the Bonds are subject in all cases
to any applicable fiscal or other laws and regulations in the place of payment, but without
prejudice to the provisions of Condition 7 (Taxation). No commissions or expenses shall be
charged to the Bondholders or Couponholders in respect of such payments.
(d)
Unmatured Coupons Void: On the due date for redemption pursuant to Condition 5 (Redemption
and Purchase) or Condition 8 (Events of Default), all unmatured Coupons relating thereto
(whether or not still attached) shall become void and no payment will be made in respect
thereof.
(e)
Partial Payments: If a Paying Agent makes a partial payment in respect of any Bond or Coupon
presented to it for payment, such Paying Agent will enface thereon a statement indicating the
amount and the date of such payment.
Taxation
All payments of principal, premium (if any) and interest in respect of the Bonds will be made without
deduction or withholding for or on account of any present or future taxes, duties, assessment or
governmental charges of whatever nature imposed or levied by or on behalf of the PRC or by or within
any of its political subdivisions or authorities having power to tax (a “PRC Tax”), unless deduction or
withholding of such PRC Tax is compelled by law. In that event, China Eximbank shall pay such additional
amounts as will result in the receipt by Bondholders of the amounts which would otherwise have been
receivable in respect to principal, premium (if any) and interest had no such deduction or withholding been
required, except that no such additional amount shall be payable in respect of any Bond for or on account
of:
(a)
a Bondholder who is subject to such PRC Tax in respect of such Bond by reason of his being
connected with the PRC (or any of its political subdivisions) other than merely by holding such
Bond or receiving principal or interest in respect of such Bond; or
— A-3 —
(b)
a Bondholder who would not be liable for or subject to such withholding or deduction by
making a declaration of identity, non-residence or other similar claim for exemption to the
relevant tax authority if, after having been requested to make such a declaration or claim, such
holder fails to do so; or
(c)
a Bondholder presenting a Bond for payment more than 30 days after the Relevant Date, except
to the extent that the holder of such Bond would have been entitled to such additional amounts
on presenting the same for payment on the last day of such 30-day period.
In these Conditions, “Relevant Date”, in relation to any payment due on a Bond, means whichever
is the later of (i) the date on which the payment in question first becomes due and (ii) if the full amount
payable has not been received in Hong Kong by the Fiscal Agent on or prior to such due date, the date on
which (the full amount having been so received) notice to that effect has been given to the Bondholders
in accordance with Condition 14 (Notices).
The obligation of China Eximbank to pay additional amounts in respect of taxes, duties, assessments
and other governmental charges shall not apply to (a) any estate, inheritance, gift, sales, transfer, personal
property or any similar tax, duty, assessment or other governmental charge or (b) any tax, duty, assessment
or other governmental charge which is payable otherwise than by deduction or withholding from payments
of principal of or interest on the Bonds; provided China Eximbank shall pay all stamp or other taxes,
duties, assessments or other governmental charges, if any, which may be imposed by the PRC or any PRC
political subdivision or taxing authority, with respect to the Fiscal Agency Agreement or as a consequence
of the issue of the Bonds.
Any reference in these Conditions to principal or interest shall be deemed to include any additional
amounts in respect of principal or interest (as the case may be) which may be payable under this Condition
7 (Taxation).
8
Events of Default
If any of the following events (each, an “Event of Default”) occurs and is continuing:
(a)
Non-payment: failure by China Eximbank to pay any amount of principal, premium, if any, or
interest in respect of the Bonds on the due date for payment thereof and such default continues
for 30 days or more; or
(b)
Breach of other obligations: default by China Eximbank in the performance or observance of
any of its other obligations under or in respect of the Bonds or the Fiscal Agency Agreement
and such default remains unremedied for 60 days following receipt by China Eximbank of
written notice of such default (with a copy to the Fiscal Agent), by holders of an aggregate
principal amount of not less than 10 per cent. of the Outstanding Bonds, to remedy such failure;
or
(c)
Cross-default: failure by China Eximbank to make any payment when due of principal or
interest in excess of US$25,000,000 (or its equivalent in any other currency or currencies)
payable (whether upon maturity, acceleration or otherwise) on or in connection with Public
External Indebtedness (other than that represented by the Bonds) or guarantees given by China
Eximbank in respect of Public External Indebtedness of others, and such failure by China
Eximbank to make payment or to validly reschedule the payment (with the consent of the
persons to which such Public External Indebtedness is owed) of such Public External
Indebtedness continues for 30 days or more after the expiry of any applicable grace period
following the date on which such payment became due; or
(d)
Moratorium: an order is issued or any other action is taken by appropriate authorities of or in
the PRC for China Eximbank’s dissolution or merger or consolidation (except where China
Eximbank is the continuing entity) or for the transfer or assignment of the whole or a material
part of China Eximbank’s assets except, in either case, where all China Eximbank’s obligations
under the Bonds then outstanding are legally assumed by another agency designated by the
State Council of the PRC; provided that (i) such agency is a solvent financial institution
organised and existing under the laws of the PRC, (ii) such agency is controlled, directly or
— A-4 —
indirectly, by the PRC, (iii) such agency assumes in writing all of China Eximbank’s
obligations under the Bonds, and (iv) immediately after giving effect to such transaction no
event of default or event or condition that, with the giving of notice or the lapse of time or both,
would become an event of default has occurred and is continuing;
(e)
Ownership: the PRC government ceasing to own at least 51% of the equity interest in China
Eximbank; or
(f)
No liquidity support: save where the PRC central government shall guarantee or otherwise
assume the indebtedness and all of China Eximbank’s obligations evidenced by the Bonds and
the Fiscal Agency Agreement, the People’s Bank of China (or the successor central bank of the
PRC) ceases or fails to provide the liquidity support stipulated in the Special Decree of the State
Council of China dated 19 March 1994 (the “Special Decree”) as in effect as of the date of
issue of the Bonds or the Special Decree (i) is modified in a manner which prejudices the rights
of the Bondholders or Couponholders or (ii) ceases to be valid or effective unless it is replaced
by such enactment or legislation which is not prejudicial to the rights of Bondholders or
Couponholders,
then each Bondholder may declare the principal of the Bonds to be due and payable immediately by
written demand given to China Eximbank and the Fiscal Agent at the specified office of the Fiscal
Agent, unless prior to receipt of such demand by the Fiscal Agent, all such defaults have been cured.
China Eximbank shall notify Bondholders and the Fiscal Agent promptly upon becoming aware of
the occurrence of any Event of Default, but will not be obligated to furnish any periodic evidence
as to the absence of defaults.
9
Prescription
Claims for principal shall become void unless the relevant Bonds are presented for payment within
10 years of the appropriate Relevant Date. Claims for interest shall become void unless the relevant
coupons are presented for payment within six years of the appropriate Relevant Date.
10
Replacement of Bonds
If any Bond is lost, stolen, mutilated, defaced or destroyed, China Eximbank shall issue, and the
Fiscal Agent shall authenticate and deliver, a substitute Bond, subject to all applicable laws, upon payment
by the claimant of the expenses and reasonable charges incurred in connection with such replacement. In
each case, the applicant for a substitute bond shall be required to furnish to China Eximbank and to the
Fiscal Agent an indemnity under which it will agree to pay China Eximbank and the Fiscal Agent for any
losses they may suffer relating to the Bond that was lost, stolen, mutilated, defaced or destroyed. China
Eximbank and the Fiscal Agent may require that the applicant present other documents and proof.
Mutilated or defaced Bonds must be surrendered before replacements will be issued.
11
Fiscal Agent and Agents
The Fiscal Agency Agreement contains provisions relating to the obligations and duties of the Fiscal
Agent and for the indemnification of the Fiscal Agent and for its relief from responsibility for actions that
it takes. The Fiscal Agent is entitled to enter into business transactions with China Eximbank without
accounting for any profit resulting therefrom.
In acting under the Fiscal Agency Agreement and in connection with the Bonds and the Coupons, the
Agents act solely as agents of China Eximbank and (to the extent provided therein) the Fiscal Agent and
do not assume any obligations towards or relationship of agency or trust for or with any of the Bondholders
or Couponholders, except that the monies paid to and held by the Fiscal Agent as payment of principal of
or interest on the bonds will be received and held by the Fiscal Agent in trust for the Bondholders and
Couponholders.
— A-5 —
The initial Agents and their initial specified offices are listed below. China Eximbank reserves the
right (with the prior approval of the Fiscal Agent) at any time to vary or terminate the appointment of any
Agent and to appoint a successor Fiscal Agent or additional or successor paying agents; provided, however,
that China Eximbank shall at all times maintain a Paying Agent in Hong Kong. Notice of any change in
any of the Agents or in their specified offices shall promptly be given to the Bondholders.
12
Meetings, Modification of Conditions and Waiver
(a)
Calling of Meeting, Notice and Quorum: China Eximbank may call a meeting of holders of
Bonds at any time and from time to time to make, give or take any request, demand,
authorisation, direction, notice, consent, waiver or other action provided by the Fiscal Agency
Agreement or the Bonds to be made, given or taken by the Bondholders or to modify, amend
or supplement the terms and conditions of the Bonds. Any such meeting shall be held at such
time and at such place in Hong Kong as China Eximbank shall determine and as shall be
specified in a notice of such a meeting that shall be furnished to the holders of Bonds at least
30 days and not more than 60 days prior to the date fixed for the meeting. In addition, the Fiscal
Agent may at any time and from time to time call a meeting of the Bondholders, for any such
purpose, to be held at such time and at such place in Hong Kong as the Fiscal Agent shall
determine, after consultation with China Eximbank, and as shall be specified in a notice of such
meeting that shall be furnished to the Bondholders, at least 30 days and no more than 60 days
prior to the date fixed for the meeting. In case at any time the holders of at least 15 per cent.
in aggregate principal amount of the Outstanding Bonds shall have requested the Fiscal Agent
to call a meeting of the Bonds, for any such purpose as specified above, by written request
setting forth in reasonable detail the action proposed to be taken at the meeting, the Fiscal
Agent shall call such meeting for such purposes by giving notice thereof. Such notice shall be
given at least 30 days and not more than 60 days prior to the meeting. Notice of every meeting
of holders of Bonds shall set forth the time and place of the meeting and in general terms the
action proposed to be taken at such meeting. In the case of any meeting to be reconvened after
adjournment for lack of a quorum, notice of such meeting shall be given not less than 10 nor
more than 15 days prior to the date fixed for such meeting.
To be entitled to vote at any meeting of the Bondholders, a person shall be a holder of
Outstanding Bonds or a person duly appointed by an instrument in writing as proxy for such
a holder. The persons entitled to vote a majority of the aggregate principal amount of the
Outstanding Bonds shall, other than in respect of a Reserved Matter (as defined below),
constitute a quorum. At the reconvening of any meeting adjourned for a lack of a quorum, the
persons entitled to vote 25 per cent. of the aggregate principal amount of the Outstanding Bonds
shall constitute the quorum for the taking of any action set forth in the notice of the original
meeting. For the purposes of a meeting of holders of Bonds that proposes to discuss a Reserved
Matter (as defined below), the persons entitled to vote 75 per cent. of the aggregate principal
amount of the Outstanding Bonds shall constitute a quorum. In the absence of a quorum, a
meeting shall be adjourned for a period of at least 20 days. The Fiscal Agent, after consultation
with China Eximbank, may make such reasonable and customary regulations consistent
herewith as it shall deem advisable for any meeting of the Bondholders, including attendance
at such meeting and voting, the proof of the appointment of proxies in respect of holders of
Bonds, determining the validity of any voting certificates or block voting instructions, the
adjournment and chairmanship of such meeting, the appointment and duties of inspectors of
votes, the submission and examination of proxies, certificates and other evidence of the right
to vote, and such other matters concerning the conduct of the meeting as it shall deem
appropriate.
(b)
Voting and Consents: If sanctioned by an Extraordinary Resolution, China Eximbank and the
Fiscal Agent may modify, amend or supplement the terms of the Bonds in any way, and the
Bondholders may make, take or give any request, demand, authorisation, direction, notice,
consent, waiver (including waiver of future compliance or past default) or other action given
or taken by the Bondholders; provided, however, that the following matters (“Reserved
Matters” and each, a “Reserved Matter”) shall require (i) the affirmative vote, in person or
by proxy thereunto duly authorised in writing, of the holders of not less than 75 per cent. of the
— A-6 —
aggregate principal amount of the Bonds then Outstanding represented at such meeting, or (ii)
the written consent of the holders of not less than 75 per cent. of the aggregate principal amount
of the Bonds then Outstanding: (A) change the due dates for the payment of principal of, or any
instalment of interest on, or any other amount in respect of, any Bond; (B) reduce the principal
amount of any Bond; (C) reduce the portion of the principal amount that is payable in the event
of an acceleration of the maturity of any Bond; (D) reduce the interest rate on any Bond; (E)
reduce the premium payable, if any, upon the redemption of any Bond; (F) change the currency
or places in which payment of interest or principal in respect of the Bonds is payable; (G)
permit early redemption of the Bonds or, if early redemption is already permitted, set a
redemption date earlier than the date previously specified or the redemption price; (H) reduce
the above-stated percentage of the principal amount of Outstanding Bonds the vote or consent
of the holders of which is necessary to modify, amend or supplement the terms and conditions
of the Bonds or to make, take or give any request, demand, authorisation, direction, notice,
consent, waiver or other action provided hereby or thereby to be made, taken or given; (I)
change the obligation of China Eximbank to pay additional amounts as provided in Condition
7 (Taxation); or (J) change the status of the Bonds as described in Condition 2 (Status). In these
Conditions, “Extraordinary Resolution” means (a) in respect of a matter other than a
Reserved Matter a resolution passed at a meeting of the Bondholders, duly convened and held
in accordance with this Schedule, by a majority of not less than 66.67 per cent. of the aggregate
principal amount of Bonds then Outstanding represented at such meeting; and (b) in respect of
a Reserved Matter a resolution passed at a meeting of the Bondholders, duly convened and held
in accordance with this Schedule, by a majority of not less than 75 per cent. of the aggregate
principal amount of Bonds then Outstanding represented at such meeting.
In addition, and notwithstanding the foregoing, at any meeting of the Bondholders duly called
and held as specified above, upon the affirmative vote, in person or by proxy hereunto duly
authorised in writing, of the holders of not less than 66.67 per cent. of aggregate principal
amount of the Bonds then Outstanding represented at such meeting, or by the written consent
of the holders of not less than of not less than 66.67 per cent. of aggregate principal amount
of the Bonds then Outstanding, the Bondholders may rescind a declaration of the acceleration
of the principal amount thereof if the Event or Events of Default giving rise to the declaration
have been cured or remedied and provided that no other Event of Default has occurred and is
continuing.
China Eximbank and the Fiscal Agent may, without the vote or consent of any Bondholders,
amend the Bonds for the purpose of (i) adding to the covenants of China Eximbank for the
benefit of the Bondholders, or (ii) surrendering any right or power conferred upon China
Eximbank in respect of the Bonds, or (iii) providing security or collateral for the Bonds, or (iv)
curing any ambiguity in any provision, or curing, correcting or supplementing any defective
provision, contained herein or in the Bonds in a manner which does not adversely affect the
interest of any Bondholders, or (v) effecting any amendment which China Eximbank and the
Fiscal Agent mutually deem necessary or desirable so long as any such amendment is not
inconsistent with the Bonds and does not, and will not, adversely affect the rights or interests
of any Bondholders.
It shall not be necessary for the vote or consent of the Bondholders to approve the particular
form of any proposed modification, amendment, supplement, request, demand, authorisation,
direction, notice, consent, waiver or other action, but it shall be sufficient if such vote or
consent shall approve the substance thereof.
(c)
Binding Nature of Amendments, Notices, Notations, etc.: Any instrument given by or on behalf
of any Bondholder in connection with any consent to or vote for any such modification,
amendment, supplement, request, demand, authorisation, direction, notice, consent, waiver or
other action shall be irrevocable once given and shall be conclusive and binding on all
subsequent Bondholders or any Bond issued directly or indirectly in exchange or substitution
therefor or in lieu thereof. Any such modification, amendment, supplement, request, demand,
authorisation, direction, notice, consent, waiver or other action taken, made or given in
accordance with Condition 12(b) (Voting and Consents) hereof shall be conclusive and binding
— A-7 —
on all Bondholders, whether or not they have given such consent or cast such vote or were
present at any meeting, and whether or not notation of such modification, amendment,
supplement, request, demand, authorisation, direction, notice, consent, waiver or other action
is made upon the Bonds. Notice of any modification or amendment of, supplement to, or
request, demand, authorisation, direction, notice, consent, waiver or other action with respect
to the Bonds or the Fiscal Agency Agreement (other than for purposes of curing any ambiguity
or of curing, correcting or supplementing any defective provision hereof or thereof) shall be
given to such Bondholders affected thereby, in all cases as provided in the relevant Bonds.
Bonds authenticated and delivered after the effectiveness of any such modification, amendment,
supplement, request, demand, authorisation, direction, notice, consent, waiver or other action
may bear a notation in the form approved by the Fiscal Agent and China Eximbank as to any
matter provided for in such modification, amendment, supplement, request, demand,
authorisation, direction, notice, consent, waiver or other action. New Bonds modified to
conform, in the opinion of the Fiscal Agent and China Eximbank, to any such modification,
amendment, supplement, request, demand, authorisation, direction, notice, consent, waiver or
other action taken, made or given in accordance with Condition 12(b) (Voting and Consents)
hereof may be prepared by China Eximbank authenticated by the Fiscal Agent and delivered in
exchange for Outstanding Bonds.
(d)
“Outstanding” Defined: For purposes of the provisions of the Bonds, any Bond authenticated
and delivered pursuant to the Fiscal Agency Agreement shall, as of any date of determination,
be deemed to be “Outstanding”, except:
(i)
Bonds duly cancelled by the Fiscal Agent or duly delivered to the Fiscal Agent for
cancellation;
(ii)
Bonds which have become due and payable at maturity or otherwise, and with respect to
which, in each case, monies sufficient to pay the principal thereof and any interest thereon
shall have been paid or duly provided for; or
(iii) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated
and delivered pursuant to the Fiscal Agency Agreement;
provided, however, that in determining whether the holders of the requisite principal amount of
Outstanding Bonds are present at a meeting of the Bondholders for quorum purposes or have
consented to or voted in favour of any request, demand, authorisation, direction, notice,
consent, waiver, amendment, modification or supplement hereunder, or have delivered any
notice in relation to the Bonds, Bonds owned, directly or indirectly, by China Eximbank will
be disregarded and deemed not to be Outstanding, except that in determining whether the Fiscal
Agent shall be protected in relying upon any such request, demand, authorisation, direction,
notice, consent, waiver, amendment, modification, or supplement, or any such notice from
holders, only Bonds that the Fiscal Agent knows to be so owned shall be so disregarded.
13
Further Issues
China Eximbank may from time to time, without the consent of Bondholders, create and issue further
Bonds having the same terms and conditions as the Bonds in all respects, except for the issue date, issue
price and the first payment of interest thereon. Additional Bonds issued in this manner will be consolidated
with and will form a single series with the Bonds.
14
Notices
(a)
Publication: Notices to the Bondholders shall be valid if published in English in South China
Morning Post and in Chinese in Hong Kong Economic Times. If at any time publication in such
newspaper is not practicable, notices will be valid if published in an English and/or Chinese
language newspaper, as the case may be, with general circulation in Hong Kong. Any such
notice will be deemed to have been given on the date of such publication or, if published more
than once on different dates, on the first date on which publication is made.
— A-8 —
(b)
CMU: For so long as all of the Bonds are represented by the Global Bond and the Global Bond
is held on behalf of the CMU Operator, notices to Bondholders may be given by delivery of the
relevant notice to the persons shown in a CMU Instrument Position Report issued by the CMU
Operator on the business day preceding the date of despatch of such notice as holding interests
in the Global Bond for communication to the relative Accountholders rather than by publication
as required by Condition 14(a) (Publication). Any such notice shall be deemed to have been
given to the Bondholders on the second day after the day on which such notice is delivered to
the persons shown in the relevant CMU Instrument Position Report as aforesaid.
However, for so long as the Bonds are represented by a Global Bond held by or on behalf of
the CMU Operator, any Bondholder must deliver his or her notice to China Eximbank or the
Fiscal Agent through the CMU by a direct or indirect Accountholder, with whom the
Bondholder maintains his or her ownership in the Bonds in accordance with CMU’s standard
procedures.
15
Governing Law and Arbitration
(a)
Governing Law: The Fiscal Agency Agreement, the Bonds and the Coupons shall be governed
by and construed in accordance with Hong Kong law, except that all matters governing the
authorisation and execution by China Eximbank shall be subject to the laws of the PRC.
(b)
Jurisdiction: The courts of Hong Kong are to have non-exclusive jurisdiction to settle any
disputes which may arise out of or in connection with the Fiscal Agency Agreement, the Bonds
and the Coupons and accordingly any suit, legal action or proceedings arising out of or in
connection with the Fiscal Agency Agreement, the Bonds and the Coupons (“Proceedings”)
may be brought in such courts. China Eximbank irrevocably submits to the jurisdiction of such
courts and waives any objection to Proceedings in any such courts whether on the ground of
venue or on the ground that the Proceedings have been brought in an inconvenient forum. This
submission is made for the exclusive benefit of each of the Bondholders and Couponholders
and nothing contained in this Clause shall limit the right of the any of them to take Proceedings
in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently
or not.
(c)
Agent for Service of Process: China Eximbank irrevocably appoints The Law Debenture
Corporation (H.K.) Limited of Suite 3105, 31/F Alexandra House, Central, Hong Kong as its
agent in Hong Kong to receive service of process in any Proceedings in Hong Kong based on
the Fiscal Agency Agreement, the Bonds and the Coupons. If for any reason China Eximbank
does not have such an agent in Hong Kong, it will promptly appoint a substitute process agent
and notify the Bondholders of such appointment. Nothing herein shall affect the right to serve
process in any other manner permitted by law.
(d)
Consent to Enforcement and Waiver of Immunity: In respect of any Proceedings, China
Eximbank shall irrevocably consent to the giving of any relief and the issue of any process in
connection with such Proceedings, including, without limitation, the making, enforcement or
execution (against any of the assets of China Eximbank whatsoever, irrespective of their uses
or intended uses), of any order or judgment made or given, in any such Proceedings, and to the
extent that China Eximbank may in any jurisdiction claim for itself or its assets, or have
attributed to itself or its assets, any right of immunity on the grounds of sovereignty from any
legal action, suit, proceeding, execution, attachment or other legal process, China Eximbank
shall irrevocably agree not to claim and will waive such immunity to the fullest extent permitted
by law.
FISCAL AGENT
BANK OF CHINA (HONG KONG) LIMITED
25/F, Bank of China Centre
Olympian City
11 Hoi Fai Road
West Kowloon
Hong Kong SAR
— A-9 —
ISSUER
The Export-Import Bank of China
No. 30 Fuxingmennei Street
Xicheng District
Beijing 100031
People’s Republic of China
FISCAL AGENT AND PRINCIPAL PAYING AGENT
Bank of China (Hong Kong) Limited
25th Floor
Bank of China Centre
Olympian City
11 Hoi Fai Road, West Kowloon
Hong Kong SAR
LEGAL ADVISORS TO ISSUER
as to Hong Kong SAR law
as to PRC law
Sidley Austin
Level 39
Two International Finance Centre
8 Finance Street, Central
Hong Kong SAR
Jun He Law Offices
20th Floor
China Resources Building
8 Jianguomenbei Avenue
Dongcheng District
Beijing 100005, PRC
LEGAL ADVISORS TO JOINT LEAD MANAGERS
as to Hong Kong SAR law
as to PRC law
Linklaters
10th Floor
Alexandra House
18 Chater Road, Central
Hong Kong SAR
King & Wood
40th Floor, Office Tower A
Beijing Fortune Plaza
7 Dongsanhuan Zhonglu
Chaoyang District
Beijing 100020
People’s Republic of China
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