Shandong International Trust Corporation

    Shandong International Trust Corporation (SITC) was set up in February 1988 and registered in Jinan City. By the end of 2005, the registered capital of SITC are RMB 1.28 billion (including USD15 million), the self-owned assets are RMB 1.567 billion, the trust assets are RMB 16.891 billion, and the net assets are RMB 1.379 billion. The profits of 2005 are RMB 103 million, and the entrusted provincial capital construction funds realized an income of RMB 1.44 billion, with an increment of RMB 258 million.
ⅠBrief Introduction
    SITC is a non-banking financial institution set up in February 1988 with the approval of the People’s Bank of China and Shandong Government, and it was a wholly state-owned company of the provincial government. According to the re-registration requirement of the state on ITCs, SITC has developed into a limited liability company, and has finished the work of capital enlargement, management reorganization and re-registration in August of 2002. The registered capital has increased from RMB1.1 billion to RMB1.28 billion (including USD15 million). At present, the followings are its five shareholders: Shandong Luxin Investment Holdings Group Co., Ltd., Shandong High-tech Investment Corporation Ltd., Shandong Gold Corporation Ltd., Jinan Energy Investment Co. Ltd. and Weifang Investment Corporation. Among these, Shandong Luxin Investment Holdings Group Co., Ltd. holds 85.94% of shares of SITC.
    SITC has established corporation management structure according to the modern corporation system, and set up and perfected the general meeting of shareholders, board of directors, board of supervisors and leading group. The above organizations implement their functions according to the “Company Law of P. R. China” and “Management Regulations of Trust and Investment Companies” to guarantee the continuous and steady development of the company.
    The operation achievements of SITC rank top of the 56 trust companies of China, and it has comparatively high profit- earning and competitive powers. Compared with the data declared by trust & investment companies in 2004, SITC ranks 5th on assets, 4th on business income, 2nd on profits, 3rd on net profits and 2nd on profits per capita.
On the first members session of China Trust Industry Association held in Nov. of 2004, SITC was elected as director member of the Association, which improves its status and force in the industry.
    Ⅱ Business Scope
    In recent years, the state promulgated “Trust Law”, “Management Regulations of Trust and Investment Companies”, “Provisional Management Regulations of Capital Trust” etc., thus to let the trust companies have laws and regulations to follow and enlarge the development space. The following is the business scopes of SITC: Entrusted operation of capital trust businesses; Entrusted operation of trust businesses of chattels, real estate, and other assets; Entrusted operation of public welfare trust; Entrusted operation of investment funds; Operation of reorganization, purchase and merger of enterprise assets as well as interim businesses of project financing, conduction of corporate finance, and financial adviser; Entrusted sales of national debts and enterprises debts approved by relevant departments of the State Council; Inter-bank deposit; Other businesses approved by People’s Bank of China(all the above mentioned businesses include foreign exchange business).
    Ⅲ Business Summarization
Since its establishment, SITC commits itself to business deploitation and innovation, and has achieved improvement and development in every business scope, and accumulated lots of successful experiences.
    1. Provincial Capital Construction Funds
Entrusted by Shandong provincial government, SITC is in charge of managing the Provincial Capital Construction Funds as its key business since its establishment. By the end of 2005, the total fund assets have been increased to RMB11.986 billion, in which the rolling increment adds up to RMB5.892 billion. The Capital Construction Funds have supported more than 900 provincial key projects.
    Shandong Huaneng Power Company, sponsored by SITC, was listed on New York Stock Exchange in 1994; Shandong International Power Development Co., Ltd., also sponsored by SITC, was listed on Hong Kong Stock Exchange in 1999; Shandong Airlines Company, Shandong Airport Co., Ltd., Shandong Nuclear Power Co. Ltd. and SINOPEC Qingdao Oil Refining Co. Ltd., which invested by the Funds, are well-known and influential in the industry.
    2. Trust Business
    To expand trust business and increase financing proceeds are the emphases of business development of SITC. With fine credit standing and professional financing experiences, SITC innovates and exercises original financial products. It has successful exploration on trust financing, and it has issued the first aggregated capital trust project of Shandong and the first foreign exchange capital trust project of China. It also firstly designed the trust product based on equity income rights. In 2005, it has successfully issued 16 aggregated capital trust projects with total amount of RMB 1.48 billion.
    3. International Financial Business
    As a primary channel of foreign financing for Shandong Provincial Government, SITC actively develops international capital market and carries out international financial business. It has established sound relationship on business cooperation with more than 100 financial institutions worldwide. The medium-long term and short term foreign currency capital raised by SITC abroad totaled more than USD 6 billion, which has supported over 1000 construction projects in the province. By the end of 1999, all of these foreign capitals had been returned on due time, marking SITC the first trust and investment corporation in China that returned the foreign debts on due time. The image of Shandong Province was maintained and the good international reputation of SITC was significantly kept. The People’s bank of China thus fully affirmed and highly evaluated SITC. The NIS implemented bond credit rating to SITC in 1993, 1995 and 1997 respectively, and extended A+ every year. SITC accepted passive bond credit rating by the Moody’s in 1996 and 1997, and received Baa2 for the two years.
    4. Securities Investment Funds Business
    SITC is the first institution that obtained the leading underwriter qualification of Share A in Shandong Province, and also is one of the first institutions that carried out securities business in China. It has successfully acted as the leading underwriter or co-leading underwriter for the IPO of several listed companies, such as Jinan Department Store Co., Ltd., Nanshan Industrial Co., Ltd. and Qingdao Beer Co. Ltd.. According to the relevant regulations issued by the State to separate the business of trust and securities, SITC had participated in Qilu Securities Brokerage Co., Ltd. and Minsheng Securities Co., Ltd. At present, SITC pay more attention to securities investment fund business, it had sponsored and participated First-Trust and Fullgoal Securities Investment Funds. First-Trust Fund Management Co., Ltd. is the first securities investment company which is mainly sponsored and comparatively controlled by a trust and investment corporation after the self-discipline and promise regulation of “the good person raises hand” was implemented.
    5. Other Businesses
SITC makes full use of its trust advantages to develop investment banking business such as employee shareholding reform, financial lease, assets management, assets restructuring, financing advisor etc.. It explores and exercises business like enterprises’ annuity and assets securitization, thus to extend comprehensive financial services to the clients and to promote the continuous development of the company.
    IV. The Company Possessing Advantages for Better Development
    1. The trust business is facing with favorable development opportunity.
The Chinese economy has maintained a steady and rapid growth, and the economic growth rate in 2005 reached 9.9%. Shandong Province, in which SITC located, is a prosperous coastal province of China. Its economic development has always been in a fast track in recent years. The high speed development of the region economy has brought a formidable power for the development of local financial institutions. At present, the savings deposit of inhabitants both in city and countryside has amounted to RMB 13 thousand billion, which eagerly requires miscellaneous financial services to sustain and increase the wealth. Moreover, there are lots of other properties in the society, such as the over-the-budget fund of the local authority, the fund for special projects held by the central and local responsible administrative departments, the social public welfare fund, the social security fund, the property that some enterprises leaves unused, the property that cannot be managed personally, etc. All these properties have created a widespread market for the trust company.
    2. SITC has acquired favorable government supports and advantageous policy environment.
At the end of 2005, the Shandong Provincial Government has constituted “The Plan and Compendium for Financial Industry Development in the 11th Five-year Plan Period of Shandong Province”. The purpose is to support the financial industry, and to enhance the national economy proportion that the financial industry occupies. The Shandong Provincial Government has high regards towards the development of SITC. Governor Han Yuqun proposed the request of “making SITC to become a large and strong corporation”. Thus the company faces an extremely advantageous policy environment for its development.
    3. SITC has reputed shareholders.
    The company has 5 shareholders in total, among which Shandong Luxin Investment Holdings Group Co., Ltd. is the investment entity and the capital operation organization that established by the Shandong Provincial Government. The Luxin Group is dedicated to adjusting and optimizing the industrial structure in the province through exerting the function of investment orientation. Shandong High-tech Investment Corporation is one of the large-scaled high-tech venture investment companies in China, which has established joint venture capital funds or strategic cooperation relationships with some institutions domestic and abroad, such as Singapore United Overseas Bank Group, CHINAVEST, Morgan Stanley, China Development Bank, etc. Shandong Gold Corporation Ltd. is a large-scaled enterprise group that directed by Shandong People’s Government, which plays a leading role in the gold industry in the province, and its comprehensive strength is among the best in China’s gold industry. Jinan Energy Investment Co. Ltd. and Weifang Investment Corporation are set up by Jinan and Weifang Municipal Government respectively as government investment entity. These shareholders have brought the high grade customers, and also introduced the government supports for SITC.
    4. SITC has widespread customers and talented staff.
    During its developing process of 18 years, SITC has always persisted in the principle of good faith, and has won the recognition and the confidence from customers and partners, which helps the company to establish a solid cooperation foundation. SITC has established widespread customer resources network both in domestic and abroad, maintained good business relationship with more than 100 financial institutions from foreign countries or outside the boundaries, and invested and supported more than 2,000 enterprises in the country, thus it has possessed thousands of customers. At the same time, SITC has also brought up a talented work team that is skilled in financial information and affluent in business experiences. All of the executive officers in the leading group have master degrees or MBA (EMBA) educational background. Now the company has 90 staff members, among which 77% have the undergraduate degree or above, 80% have technical titles in economics, accounting and engineering. All these resources are the unique intangible assets, and shall play an important driving function for the company’s future development.
    Reviewing the company's growth course, SITC has always regarded the prestige as its life. Through unceasing development and innovation, through the practice of pursuing the best, SITC has set up a good financial service reputation, and has grasped remarkable competitive advantages in the industry. It can always obtain the vigorous support from the local authorities. With its long-time accumulated development foundation, SITC must have a more prosperous further.