China Development Bank - History

History

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

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

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

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

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

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

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

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

The China Development Bank will continue to play significant role in reshaping the economy of the People's Republic of China by providing crucial national investment in high priority sectors of the economy. They have a mandate to reduce economic bottlenecks in basic and pillar industries, infrastructure, energy, communications and other sectors. In other words, to alleviate and finally eliminate resource and supply restriction "bottlenecks" and institutional "bottlenecks" through development-oriented finance. This is hope to increase the competitiveness of the economy, increase economic growth and employment for millions of people. The bank also promotes the principle of "Five Aspects Coordination." In the process of financing, CDB aims to promote corporate governance structure, enterprise system as a legal entity, cash flow management and credit management culture.