Banks issue Hainan Free Trade Port's first corporate loans tied to interbank repo rates

(ECNS) -- Branches of Industrial and Commercial Bank of China, China Merchants Bank and Shanghai Pudong Development Bank have recently issued the first batch of corporate loans linked to Depository Institutions Repo Rate (DR) benchmarks in Hainan Free Trade Port’s, expanding the use of market-based loan pricing in the free trade port.

DR benchmarks are generated through pledged repo transactions among depository institutions in China’s interbank market. They reflect liquidity conditions in the banking system and can serve as reference rates for pricing large corporate loans.

ICBC’s Hainan branch extended a 76.7 million yuan ($11.3 million) one-year DR-linked loan through a Hainan Free Trade Port multifunctional free trade account (EF account) to a foreign-invested company. The loan carries a floating rate within a set range.

China Merchants Bank’s Haikou branch issued an 8 million yuan ($1.18 million) floating-rate loan to a provincial state-owned enterprise. Shanghai Pudong Development Bank’s Haikou branch provided a 7 million yuan ($1.03 million) fixed-rate loan to a centrally administered state-owned enterprise.

Before issuing the loans, the three branches refined pricing rules, contracts, system settings and risk controls, and established procedures for quotations, interest calculations and loan approvals.

(By Intern Yang Hongran, Zhang Dongfang)