Green Credit in China Minsheng Bank---WB China Energy Efficiency Financing II

WWW.CMBC.COM.CN

CMBC Introduction

China Energy Efficiency Project II

Lessons and Conclusions

CMBC Introduction
Year ended Total assets Gross loans Net profit Deposits Dec. 31 2010 (RMB bil)
1823.74 1057.57 17.69 1416.94

Founded in 1996 Only Private bank in China 509 branches in China Listed in HK and Shanghai Universal licensed banks 8th largest bank in China

No. of employees ROAA ROAE Impaired loan ratio Loan loss reserve coverage Total capital adequacy ratio Core capital adequacy ratio

30931
1.09% 18.29% 0.69% 207.45% 10.44% 8.07%

CMBC Introduction

Green-credit bank

EIA for every relevant loan Strict compliance with regulatory requirementwithdraw VS support Sound relationship with international orgs and local regulators (MOF, NDRC) Total financing in EE related up to RMB30 B

China Energy Efficiency Project II(EE)

12th Five-Year Plan of

Chinese government Follow government policy On-lending of the WB Energy Efficiency Financing Project Good track record of CMBC Long-term relationship with related parties

Financing through Joint Facility

Main Participant

WB
Tools - loan -CDM -Entry Framework -TA

$ 100 MM WB loan

CMBC

Other Participants (IFC, Banks, Donors)

TA $500 MM

$20 MM

$?

TA

IFC
IFC Risk Participation

CEEF II Debt Facility [CMBC ]

Managed by CMBC Participant Commission

Project Identification Project Appraisal Project Approval Funds management

Potential Industry funds $520MM + $?

Private funds

Equity

EE Project 1

EE Project 2

EE Project 3

EE Project 4

EE Project 5

Final Project Framework

$ 100 MM WB loan

WB
Tools - Loan -TA

CMBC

$500MM

CEEF II Debt Facility [Managed by CMBC]

Project Identification Project Appraisal Project Approval Funds management

EE Project 1

EE Project 2

EE Project 3

EE Project 4

EE Project 5

Project owner $400 MM

Scaling up to $1 billion

EE Project Introduction
Content of the project
$100 MM WB loan + 500MM Parallel Funding from CMBC +$0.8 MM GEF Grant for capacity building End-user itself must provide 40% of financing CMBC bears the ultimate risk Loan rate is determined by CMBC CMBC provides treasure bond as collateral to MOF

Eligibility of EE Sub-project
Types of Sub-project Company An industrial enterprise or an energy service company (ESCO) Sub-project Eligibility: (i) replacement of inefficient industrial technologies with energy saving technologies; (ii) recovery and utilization of by-product gas, waste heat and pressure; (iii) installation of highly efficient mechanical and electrical equipments; (iv) industrial system optimization to reduce energy use (v) other EE projects, including new energy (for CMBC parallel financing)

WB Standard to meet

Policy Framework for Compensation, Resettlement, and Rehabilitation of Displaced Persons Environmental Impact Assessment Framework Anti-Corruption Guidelines Procurement Guidelines Finance and Accounting Local environmental regulation and others Exploring Equator Principles Project and financial reports..

Up to date progress
Industry Project Name Investment Energy Saving and Emissions Reduction

Energy

Garbage furnace burning CMBC LOANS: CNY33 mil system renovation Self-financing: CNY30 mil project LOANS: USD3 mil

WB Coal saving: 40000ton/year

Plumbum and zinc smelt

Equipment renovation for energy saving and consumption reduction project

CMBC LOANS: USD15 mil financing: CNY48.2 mil

Self-

Coal saving: 24526 ton/yearCO2 reduction:61300 ton/year;SO2 reduction: 404 ton/year;Dust reduction: 6131.5 ton/year

Manufacturing

Furnace afterheat resources transformation project

Self-financing:CNY19.58 mil WB LOANS: USD 30 mil

Coal saving:19821 ton/year;CO2 reduction:45356 ton/year

Up to date progress
Steel Utilization and transformation of GOR furnace afterheat to generate electricity CMBC LOANS:CNY100 mil Selffinancing:CNY61.8 mil WB LOANS:USD 15 mil Coal saving:34314.84 ton/year CO2 reduction: 96000 ton/year SO2 reduction: 270 ton/year

Black steel smelt

environmental removing and CMBC LOANS:CNY 4000 mil Selfreconstrucing project financing: CNY1525.18 mil

Coal saving:0.5 mil ton/year

Manufacturing

Environmental energy saving and regenerating asphaltum commix system renovation project

CMBC LOANS:CNY 270 mil financing: CNY 130 mil

Self-

Coal saving:30000 ton

Manufacturing

Utilization and transformation of furnace afterheat resources to generate electricity project

CMBC LOANS:CNY 200mil financing:CNY 126.6 mil

Self-

Coal saving:142800 ton

CO2 reduction: 117504 ton

Black steel smelt

BeiXing 0.5 mil ton renovation for energy saving project

CMBC LOANS:CNY 900 mil financing:CNY 570 mil

Self-

Coal saving:0.1 mil ton/year

Up to date progress
Founding Utilize the furnace coal gas to generate electricity Self-financing:CNY 40 mil LOANS:USD 13.6 mil WB CO2 reduction:9331 ton;SO2 reduction:0.5234 ton; Coal saving:55100 ton Electricity saving:1.6210^8 KWh

Coal gas manufacturing and supplying

1.5 mil ton/year coke extinguish project

Self-financing:CNY120.55 mil CO2 reduction:226300 ton;SO2 reduction:34.69 ton WB LOANS:USD 20 mil saving:86400 ton

Coal

Light industry

Coal furnace burning system renovation project

CMBC LOANS:CNY 40.88 mil Self-financing:CNY 17.6 mil

Electricity saving:1.47mil KWh Coal saving:19715 ton;SO2 reduction:557.5 ton;CO2 reduction:55000 ton

Chemical

Chemical plant renovation project

Self-financing:CNY 2.84 mil WB LOANS:USD 6.61 mil

Electricity saving:44.2mil KWh Coal saving:15000 ton CO2 reduction:44000 ton

New energy

Commercial building lighting system renovation project

CMBC LOANS:CNY 247.63 mil Coal saving: 320000 ton CO2 reduction: 930000 Self-financing:CNY 106.15 mil ton;Electricity saving:9.3710^8 KWh

Prospective in 2011 and forward

EE awareness is picking up gradually in China EE still a major target of 12th five-year plan of China More SME and Esco in play Tightening monetary policy continues in Q3

Wish list from commercial banks perspective More favorable treatment in term of risk asset weighting and NPL tolerance/coverage ratio Feasible policy/machanism towards SMEs and Esco financing in China(government step in, international org,etc) National EE education and awareness And more.

Lessons and Conclusion

Opportunities & Luck

Complexity & efficiency

B C

Commercial interest & social responsibility

Example & scaling-up