The reporter learned that on May 15, ICBC successfully issued 40 billion yuan of TLAC non capital bonds in the inter-bank market.

TLAC (Total Loss Absorption Capacity) non capital bonds refer to financial bonds issued by global systemically important banks to meet the requirements of total loss absorption capacity, which have the function of absorbing losses and are not part of the capital of commercial banks.

Among the TLAC non capital bonds issued by ICBC this time, the 3+1 year issue scale is 30 billion yuan, and the issue interest rate is 2.25%; The 5+1 year issuance scale is 10 billion yuan, and the issuance interest rate is 2.35%.

Ensure that G-SIBs have sufficient loss absorption capacity

After deducting the issuance expenses, the funds raised from the Bonds will be used to improve the total loss absorption capacity of ICBC in accordance with applicable laws and the approval of the competent authorities.

The total loss absorption capacity refers to the total amount of capital and debt instruments that can absorb losses by writing down or converting into common shares when a global systemically important bank enters the resolution stage.

It can be seen that TLAC debt instruments are not capital instruments and can not be used as capital supplementary instruments like tier two capital bonds.

The reporter noticed that the People's Bank of China, the CBRC and the Ministry of Finance managed the issuance of non capital debt instruments with total loss absorption capacity in accordance with laws and regulations and the division of responsibilities.

The People's Bank of China, the CBRC and the Ministry of Finance shall supervise and inspect the total loss absorption capacity of global systemically important banks in accordance with the law, to ensure that global systemically important banks have sufficient loss absorption capacity, can maintain the continuity of key business and service functions in the resolution phase, and do not cause systemic financial risks.

According to ICBC's previous disclosure, the repayment order and interest payment order of the bond principal are after the issuer's excluded liabilities and before equity capital, other tier one capital instruments, mixed capital bonds, tier two capital instruments and other qualified capital instruments of all levels; The bond is in the same liquidation order with other debt instruments issued by the issuer that have the same repayment order as the current bond, and will be repaid in the same order with other debt instruments that may be issued in the future that have the same repayment order as the current bond.

According to the current regulatory provisions, the excluded liabilities include: insured deposits; Demand deposits and short-term deposits with an original maturity of less than one year; Derivatives liabilities; Debt instruments with derivative nature, such as structured notes; Liabilities not arising from contracts, such as taxes payable; In accordance with the Enterprise Bankruptcy Law of the People's Republic of China and other relevant laws and regulations, the debts that have priority over ordinary creditor's rights to be repaid; According to laws and regulations, it is difficult to write off, write down or convert the liabilities into ordinary shares.

Industry: TLAC non capital bonds will gradually become one of the mainstream financial products

The prospectus of ICBC disclosed that the bonds set the right of the issuer to choose early redemption once. ICBC may choose to redeem part or all of the Bonds at one time at face value on the last day of the interest bearing year in which the early redemption right is set for the Bonds. Before the maturity of the Bonds, if the Issuer's redemption will cause it to fail to meet the requirements of external total loss absorption capacity, the Issuer shall not redeem the Bonds without the approval of the People's Bank of China.

When the issuer enters the disposal stage, the People's Bank of China and the State Financial Supervision and Administration Administration may compel the issuer to write down part or all of the bonds after all the secondary capital instruments are written down or converted into ordinary shares. The Issuer will announce the amount to be written down, the calculation method of the amount to be written down, the execution date of the write down and the execution procedure of the write down, and notify the holders of the Bonds.

ICBC official said that the successful issuance of the bonds is an important measure for ICBC, as one of the G-SIBs, to meet the TLAC regulatory compliance requirements, strengthen risk resistance and help maintain the sound operation of China's financial system.

In order to do a good job in the issuance of TLAC non capital bonds, ICBC organized major market participants such as banks, insurance companies, funds, brokers, rating agencies, and custodians to carry out a full discussion on the background significance, bond terms, issuance plans, tool characteristics, rating methods, and valuation models of TLAC non capital bonds.

Industry insiders said that the issuance of TLAC non capital bonds further broadened the TLAC compliance channels of China's global systemically important banks, and achieved breakthroughs and innovations in accounting treatment, issuance period, debt rating, value valuation, etc. In addition, with the promotion of TLAC compliance process and the acceleration of the construction of the capital market, it is expected that TLAC non capital bonds will gradually become one of the more mainstream financial products, and more diversified TLAC innovative tools will be launched, which will help the banking industry continue to improve its robustness, prevent risk spillovers, and enhance the quality of service to the real economy.

At present, in addition to the issuance of TLAC non capital bonds by ICBC, Bank of China has recently disclosed that it is about to issue non capital bonds with total loss absorption capacity in 2024 (Phase I), which will last for 3 working days from May 16, 2024 to May 20, 2024.

The basic issuance scale of Bank of China's bonds this time is 30 billion yuan, of which the basic issuance scale of Category I is 20 billion yuan, and the basic issuance scale of Category II is 10 billion yuan.