ICBC has recently creatively launched equity-pledged lending business to medium, small and micro-sized enterprises listed on the National Equities Exchange and Quotations (NEEQ). This means enterprises listed on the NEEQ can obtain loans from banks by pledging their equities in the future, which provides a new financing channel for small and micro enterprises ( SMEs ).
An executive with ICBC said the innovative part about NEEQ equity-pledged loans lies in the guarantee mode. For non-listed companies, it is difficult for banks to value their equity. But when such an enterprise is listed on the NEEQ, its equity is given a transaction value. Therefore, using the equity of such enterprises as a means of guarantee allows some R&D-heavy but asset-light SMEs to enjoy convenient financing services of banks. As regards to risk control, while referring to the transaction value of the equity, ICBC will also take into account the operation condition, cash flow and future growth potential of the enterprises listed on the NEEQ.
NEEQ is established for national equities exchange according to the Securities Law upon the approval of the
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