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Industrial and Commercial Bank of China

From Alfawiki
Industrial and Commercial Bank of China
Company typePublic
IndustryBanking, Financial services
FoundedJanuary 1, 1984; 42 years ago (1984-01-01) in Beijing, China
Headquarters
Beijing
,
China
Area served
Worldwide
Key people
Yi Huiman (Chairman), Pan Gongsheng (Governor)
ProductsBanking, asset management, credit cards, loans
OwnerChinese government (majority ownership)
Number of employees
Not specified
ParentNone
Websitewww.icbc.com.cn

The Industrial and Commercial Bank of China (ICBC; ) is a multinational financial institution based in Beijing, China, with partial ownership by the Chinese government. It stands as the largest among China's "big four" and holds the distinction of being the largest bank globally when measured by total assets. Founded on , ICBC originated from the commercial banking segment of the People's Bank of China. Despite its 2006 landmark initial public offering, the Chinese government retains majority control. As of 2021, key shareholders include Central Huijin Investment with 34.7%, the Chinese Ministry of Finance holding 31.1%, and the National Council for Social Security Fund owning 3.5%, together accounting for a 69.3% stake.

Since 2012, ICBC has held the position as the world's largest bank in terms of total assets and continues to do so. It achieved first place on the Forbes Global 2000 ranking of leading public companies in 2015. By the close of 2022, ICBC was ranked as the third-largest bank worldwide by market capitalization, valued at $211 billion. Additionally, it ranks among the globe’s most profitable enterprises, securing fourth place in Forbes’ 2022 profitability list. The bank has also been recognized as a systemically important bank by the Financial Stability Board since the organization's establishment.

Notably, several former ICBC leaders have transitioned into high-level government positions, such as China Securities Regulatory Commission Chairman Yi Huiman and People's Bank of China Governor Pan Gongsheng.

Background

Following the 1949 Chinese Communist Revolution, China adopted a monobank structure whereby all financial activities were centralized under the People's Bank of China (PBC). Banking reforms enacted between 1978 and 1979 redefined the PBC’s role as a central bank and introduced specialized commercial banks, thereby creating a two-tiered banking framework.

1984–2006

In September 1983, the State Council resolved to separate commercial operations from government functions, resulting in the creation of the Industrial and Commercial Bank of China (ICBC) on 1 January 1984. As the fourth specialized bank established to assume commercial responsibilities from the People's Bank of China, ICBC primarily concentrated on deposit intermediation.

ICBC pursued international growth by inaugurating its first overseas branch in Singapore in 1993, followed by setting up its European headquarters in Luxembourg in 2011. In 2000, ICBC acquired Union Bank of Hong Kong, rebranding it as ICBC (Asia), which subsequently merged with Fortis Bank’s Hong Kong subsidiary in 2005.

In June 2005, ICBC introduced ICBC Credit Suisse Asset Management through a joint venture with Credit Suisse First Boston and COSCO, initially holding equity stakes of 55%, 25%, and 20%, respectively. Subsequently, ICBC purchased COSCO’s shares and increased its holding by an additional 5% from Credit Suisse.

By 2006, ICBC was servicing approximately 2.5 million corporate clients alongside 150 million individual customers.

Initial public offering

Prior to its initial public offering, on 28 April 2006, ICBC received a combined investment of US$3.7 billion from three strategic partners:

ICBC's shares were simultaneously listed on the Hong Kong Stock Exchange and Shanghai Stock Exchange on 27 October 2006, representing the largest IPO worldwide at US$21.9 billion—surpassing the previous record held by Japan's NTT DoCoMo since 1998. In 2010, this record was overtaken by Agricultural Bank of China, which raised $22.1 billion. ICBC was also notable as the first firm to debut concurrently on both exchanges.

The bank generated US$14 billion through Hong Kong (H-shares) and US$5.1 billion via Shanghai (A-shares). Due to strong demand, the greenshoe option was exercised, raising total proceeds to US$21.9 billion (representing 17% of pre-IPO market capitalization), divided between US$16 billion in Hong Kong and US$5.9 billion in Shanghai. After the offering, the free float accounted for 22.14% of market value.

On its initial trading day, shares closed nearly 15% above the HK$3.07 listing price at HK$3.52 in Hong Kong—set at the top of the price range due to robust demand. According to Bloomberg, ICBC’s market capitalization based on Hong Kong listings reached US$156.3 billion, placing it fifth globally among banks by equity, just behind JPMorgan Chase. Meanwhile, A-shares listed in Shanghai increased modestly, closing 5.1% over the RMB 3.12 offering price.

Later developments

By July 2007, ICBC ranked as the world’s 30th largest company by revenue. In August 2008, it became only the second Chinese bank since 1991 to secure U.S. federal approval to open a branch in New York City. That year, ICBC leased office space in Trump Tower and by 2012 had become its largest tenant; by October 2020, Donald Trump had received $5.4 million from ICBC through this lease agreement.

In June 2009, ICBC acquired a controlling interest of 70% in Bank of East Asia (Canada) for CAD 80.25 million (approximately US$58.53 million). By year-end 2009, it had issued over 52 million credit cards—a rise of about one-third—ranking it as the world’s fourth-largest credit card issuer with more than 280 million cards distributed overall.

ICBC continued global expansion by opening a branch in Madrid in January 2011 and establishing operations in Karachi and Islamabad by August that same year. In November 2012, it purchased an 80% stake in Standard Bank’s former BankBoston subsidiary in Argentina for $600 million—representing the largest Chinese banking presence in Latin America—with roughly one million retail clients and over 1,600 corporate customers.

During the Korean crisis in 2013, ICBC ceased dealings with a North Korean bank accused by U.S authorities of funding missile and nuclear programs. Later that year, negotiations led to ICBC acquiring Standard Bank’s London markets unit for more than $500 million; this acquisition was finalized in February 2015 and rebranded as ICBC Standard Bank.

In 2014, ICBC topped Forbes Global 2000 as the world’s largest company by revenue ($148.7 billion) and profit ($42.7 billion). That year also saw it launch its first branch in Kuwait City—the first Chinese bank there and its fourth Middle Eastern location after Dubai, Abu Dhabi, and Doha. In May 2015, ICBC further expanded by acquiring Turkey’s TekstilBank to establish ICBC Turkey.

Between 2013 and the end of 2015, ICBC Financial Services increased repo financing on U.S. government bonds from $59 billion to approximately $88 billion. In November 2016, it secured a deposit-taking license within Russia.

The bank introduced automated wealth management services using robo-advisors in 2017. By April 2019, ICBC had extended loans totaling US$100 billion supporting Belt and Road Initiative projects and operated across 124 branches located within BRI member countries.

In November 2023, ICBC’s U.S.-based subsidiary experienced a ransomware attack attributed to LockBit that disrupted clearance processes for U.S. Treasury trades and required rerouting orders. This incident impacted normal operations at the asset world's largest lender. LockBit claimed that a ransom was paid by the bank; however, this has not been independently confirmed.

Accounting

ICBC prepares its financial statements in accordance with the International Financial Reporting Standards (IFRS), incorporating IFRS 9 from 1 January 2018, which governs the classification of financial assets and liabilities, and adopting IFRS 16 from 1 January 2019, which pertains to lease accounting standards.

Key Financial Data

All financial information is presented in Renminbi:

Year 2003 2004 2005 2006 2007 2008 2009 2010
Revenue (billion) 107.5 126.7 193.1 181.6 257.4 310.2 309.4 380.7
Net Profit (billion) 2.473 2.311 33.70 49.26 81.52 110.8 129.4 166.0
Total Assets (trillion) 5.279 5.671 6.454 7.509 8.684 9.757 11.79 13.46
Shareholders’ Equity (billion) 170.5 163.0 253.4 466.5 538.4 602.7 673.9 820.4
Year 2011 2012 2013 2014 2015 2016 2017 2018
Revenue (billion) 470.6 529.7 578.9 634.9 668.7 641.7 675.7 725.1
Net Profit (billion) 208.4 238.7 263.0 276.3 277.7 279.1 287.5 298.7
Total Assets (trillion) 15.48 17.54 18.92 20.61 22.21 24.14 26.09 27.70
Shareholders’ Equity (billion) 956.7 1125 1274 1531 1789 1970 2127 2330

Environmental Policy and Performance

In the year 2008, ICBC distinguished itself as the first Chinese financial institution to adopt the Equator Principles, a global benchmark for managing social and environmental risks in financing activities. The bank also implemented the Green Credit Policy introduced by China’s Ministry of Environmental Protection in 2007 to promote environmentally responsible lending practices. Nonetheless, environmental advocacy groups have criticized ICBC for funding contentious projects such as the Gilgel Gibe III Dam located in Ethiopia.

By 2021, ICBC secured regulatory clearance to join a state-supported green fund valued at $13.6 billion (88.5 billion yuan), collaborating with Bank of China on this initiative. Both banks pledged contributions of eight billion yuan each to support eco-friendly projects along the Yangtze River through the National Green Development Fund.

Subsidiaries and Global Operations

ICBC’s principal domestic subsidiary is ICBC Credit Suisse Asset Management. On the international stage, it operates through subsidiaries including ICBC (Asia) based in Hong Kong, ICBC (Macau), ICBC Standard Bank in London, ICBC (Europe) headquartered in Luxembourg, ICBC Turkey situated in Istanbul, and ICBC Argentina located in Buenos Aires. Additional branches and offices are established in Thailand, Pakistan, Switzerland, Canada, the United States, Mexico, and a retail branch in Singapore.

The Luxembourg-based ICBC (Europe) S.A., extends its services via branches in major European cities such as Paris, Amsterdam, Brussels, Milan, Madrid, Barcelona, Warsaw, and Lisbon.

As the primary initiator of the Belt and Road Inter-Bank Regular Cooperation (BRBR), ICBC plays a pivotal role in fostering financial integration among nations participating in the Belt and Road Initiative.

Among Chinese banking institutions, ICBC boasts the most extensive footprint across Arab nations, maintaining branches throughout key Gulf markets including the UAE, Kuwait, and Qatar.


Leadership

Presidents of the Industrial and Commercial Bank of China

  • Chen Li (born 1922), served as president from January 1984 to July 1985
  • Zhang Xiao (born 1936), held the presidency from July 1985 until January 1997
  • Liu Tinghuan, president between January 1997 and February 2000
  • Jiang Jianqing, president from February 2000 to October 2005; subsequently chairman from October 2005 to May 2016
  • Yang Kaisheng, president from October 2005 through May 2013
  • Yi Huiman, president from May 2013 to September 2016; then chairman from September 2016 until January 2019
  • Gu Shu, president from September 2016 to January 2021
  • Chen Siqing, chairman between April 2019 and February 2024
  • Liao Lin (born 1966), serving as president since January 2021 and chairman since February 2024

As of May 2020, the board comprised:

  • Chen Siqing, chairman and former chairman of Bank of China
  • Gu Shu, president
  • Lu Yongzhen, former director at the National Development and Reform Commission
  • Zheng Fuqing, ex-official at the Ministry of Finance
  • Mei Yingchun, previous official at both the Ministry of Finance and the World Bank
  • Feng Weidong, former secretary at the Ministry of Finance
  • Cao Liqun, former official with the State Administration of Foreign Exchange
  • Anthony Francis Neoh, past chairman of Hong Kong's Securities and Futures Commission
  • Yang Siu Shun, ex-chairman of PricewaterhouseCoopers Hong Kong
  • Shen Si, former executive director at Shanghai Pudong Development Bank
  • Nout Wellink, previous president and chairman of De Nederlandsche Bank
  • Fred Zuliu Hu, former official with the IMF and World Economic Forum

Controversies

In 2005, Chinese authorities detained government officials and banking personnel linked to a fraudulent scheme that illicitly extracted approximately US$900 million from ICBC.

The bank extended $400 million in financing for Ethiopia’s Gibe III dam project. This involvement attracted criticism from environmental and social advocacy groups concerned about the dam’s impact.

Following its acquisition earlier in 2015, ICBC Standard Bank agreed in November of that year to pay fines totaling up to $40 million imposed by UK regulators.

In February 2016, six executives working at ICBC’s Spanish branch were arrested on money laundering charges; these individuals were convicted by Spain’s Audiencia Nacional in 2020.

The US Federal Reserve identified significant shortcomings in ICBC’s anti-money laundering practices during a review in 2018.

In August 2021, Gu Guoming, a former senior banker at ICBC, received a life sentence for bribery offenses handed down by Chinese judicial authorities.

Awards

Bibliography

Flora Xiao Huang, Horace Yeung (2019) Chinese Companies and the Hong Kong Stock Market, section 6.4.4, Routledge, published October 30, 2013 ,

External links

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