The Type-A lead underwriting licence granted to Deutsche Bank and BNP Paribas allows the two banks to carry out bond underwriting for corporate onshore issuance in China


Image: China grants Type-A underwriting licence to Deutsche Bank. Photo: courtesy of Deutsche Bank AG.

China has granted approval for Type-A lead underwriting licence to global banking giants Deutsche Bank and BNP Paribas.

The approvals have been given by the National Association of Financial Market Institutional Investors (NAFMII). As a result Deutsche Bank and BNP Paribas are now the first foreign banks to get Chinese approval to carry out underwriting for all types of onshore debt in the country.

NAFMII’s approvals also mark the latest high-profile reform made by China in 2019 with an objective to open its financial sector to foreign enterprises, reported Financial Times.

What is the Type-A lead underwriting licence in China

The Type-A lead underwriting licence is a full licence for debt financing instruments by non-financial enterprises in the China Interbank Bond Market. It is applicable for underwriting debt issuance by domestic and foreign corporates. The licence covers all debt instruments, including medium term notes, commercial paper, asset backed notes, and private placement.

Deutsche Bank already has licence in China as lead underwriter for sovereign, quasi-sovereign and financial issuers. The Type-A underwriting licence has been granted to its subsidiary, Deutsche Bank (China).

Deutsche Bank Asia Pacific CEO and management board member Werner Steinmueller said: “Deutsche Bank has been an enduring partner for China’s economic and financial development since 1872, enabling investment and trade flows between Europe and China for over a century.

“Today, we actively support China’s capital market development, from internationalisation of the RMB to foreign investor access to the onshore bond market, where we are one of the most active foreign banks.”

For BNP Paribas, the Type-A underwriting licence was granted to its subsidiary, BNP Paribas China. Prior to this, BNP Paribas was one of the three foreign banks to be awarded a Type B licence in China, which allows the banks to lead underwrite the corporate bond issuance by foreign companies outside the country.

BNP Paribas China CEO CG Lai said: “We are pleased to be awarded this licence in recognition of our work to develop and deepen foreign expertise in Chinese capital markets.

“We have been active in building the Chinese franchise for both local and multinational subsidiaries in China over the past few years and look forward to utilising this new license to offer more solutions for our onshore clients.”