Name

Risk Participation

Introduction

Risk participation means that Bank of China Brussels Branch, as a risk participating bank, participates with or without funding in all or part of credit risk of a debtor under international settlement and trade financing. Risk participation is an important product to strengthen the cooperation among the financial institutions.

Category

Depending on the fact whether the Branch provides fund or not, the products can be divided into funded risk participation and unfunded risk participation.

Funded risk participation indicates that the Branch provides participation fund for risk participation; unfunded risk participation indicates that the Branch does not provide participation fund at the early stage of a business; in case that the debtor does not fulfill the payment obligation, the Branch shall pay the pro rata claim as the risk participation.

Features

1. Solve the problem of insufficient credit extension limit of banking customers;

2. The product can help banking customers reduce risk assets and improve asset portfolio to meet the regulatory requirements on minimum capital adequacy ratio;

3. The products can support banking customers to expand business in Chinese market;

4. The product can enhance the risk-taking range, increasing the risk-taking ability of banking customers;

5. By undisclosed risk participation, the products can help banking customers maintain their relation with debtors.

Charges

The benefit of funded risk participation is mainly financing interest; the financing interest rate consists of base rate and flexible rate, and the level of flexible rate depends on country risk, debtor's credit risk, financing term and other factors. The benefit of un-funded risk participation is mainly risk-taking fee.

Scope

1. Forfaiting

2. L/C, T/T remittance, D/A collection and payment financing under domestic L/C;

3. Confirmation of L/C;

4. Re-issuance of L/G;

5. Financing for export credit insurance;

6. Discount of bank acceptance draft;

7. Other risk participation businesses.

Procedure

1. Banking customer sighs General Agreement for Risk Participation with Bank of China Brussels Branch;

2. Banking customer makes inquiry to the Branch, and provides relevant business information such as name of debtor, amount of debt, maturity date.

3. The Branch gives offer of intent and other risk participation conditions;

4. If the banking customer accepts the offer, both parties sign Single Transaction Confirmation, and the banking customer shall provides relevant business documents;

5. Under funded risk participation, the Branch shall pays the participation money to banking customer after receipt of qualified documents; under unfunded risk participation, banking customer shall pay risk-taking fee to the Branch as required by the contract;

6. Upon maturity, under funded risk participation, the Branch shall obtain debt right payment in proportion as risk participation if the banking customer receives payment from debtor; under unfunded risk participation, banking customer may claim reimbursement from the Branch if the debtor fails to make payment upon maturity.

Required Documents (take payment financing under L/C for example)

1. Duplicate of L/C and amendment;

2. Payment financing authorization text from issuing bank to reimbursing bank;

3. Payment financing confirmation and payment text from issuing bank to reimbursing bank;

Tips

1. Normally the banking customer shall sign General Agreement for Risk Participation with Bank of China (Luxembourg)S.A Brussels Branch. However, single risk participation contract can as well be adopted depending on the actual conditions;

2. Before the start of the transaction, Bank of China (Luxembourg)S.A Brussels Branch can provide comprehensive consulting services, design personalized risk participation solutions for banking customers, and commit to carrying out risk participation at certain time in future at the agreed price and terms. In this case, customers may be required to pay certain amount of commitment fee depending on the duration of commitment period.