OREANDA-NEWS.  March 29, 2013. During the last few years, ICBC has taken advantages of its wide distribution network to actively arrange syndicated loans for many large projects covering infrastructure construction, recycling economy, exploration and utilization of clean energy.

These ICBC syndicated loans have fuelled the growth of real economy. According to the statistics of China Banking Association, in 2012 ICBC participated in 309 syndicated loan projects with contract amount totaled RMB 420.8 billion. Out of which, ICBC was the lead arranger for 271 syndicated loans, representing a jump of 257% year-on-year and ranking No.1 among all banks in China.

According to an ICBC executive, the Bank has stepped up the effort in arranging syndicated loans with better services and management over the past few years. More banks are included in ICBC's distribution network. In China, ICBC is leading all other banks in syndication market. Last year, ICBC completed the syndication for Phase I of Nanjing MTR Line 3, trunk pipe network of waste water project in Dongguan, Guangdong province, Shanghai International Tourism and Resort Zone & Disney project. While serving the economic growth in China, ICBC also took part in the international syndication for Chinese companies' "going global" projects. XCMG (Xuzhou Construction Machinery Group)'s acquisition of German Schwing Group, the world's pioneering manufacturer of concrete equipment was an example. ICBC branches in and outside China worked as a team to arrange the syndicated loan.

Syndicated loan is provided by a group of lenders (banks or other financial institutions licensed to run loan business) to one borrower and is structured on the same loan conditions under the same agreement. When compared with conventional bilateral loans, syndicated loan is important to address the issues of bilateral loan. Through syndication, each bank can assess the risk profile of the borrower and discuss with other lenders. This eliminates information asymmetries and mitigates risk of lending by multi-lateral checking, balancing and supervision. Interest rate and loan tenure agreed between banks in the syndication can stop unfair competition. Syndicated loan fully reflects how much the borrower requires and the liquidity that lenders can provide, which is beneficial for loan rates to be determined by market. To the borrower, time is shorter, cost is lower since there is no need to negotiate with individual lenders.