Banks compete in Hong Kong for 0.01% fees.

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Chinese banks are set to act on Hong Kong’s second listing of major EV battery maker CATL with a 0.01 percent interest rate, underscoring the fierce competition in the once lucrative market where business has declined significantly.

CICC and CSC are among the banks willing to take a leading role in the deal, which is one of the biggest listings in Hong Kong in recent years. JPMorgan and Bank of America are also slated for the top spot.

Two people with knowledge of the matter said that CICC’s bid for part of the deal indicated that they would be willing to work on it for a fee of 0.01 percent of the amount raised, which could end up being over $ 7bn. Two people with knowledge of the matter said CSC has also created a fee around the situation.

“I think in this market, competitors are willing to do things for nothing,” said a senior banker at an agency that was willing to do the work.

Companies often use several bank numbers as a guide when deciding on deposit rates, rather than directly paying them the amount they deposit. The total fee pool can be divided differently between banks.

CATL planned to pay 0.2 percent of registration fees, two people with knowledge of the matter said. Incentive fees on top of this — based on the value of the orders each bank brings in — could make the final figure higher, said two people briefed on the deal. Fees for large deals like the CATL listing can often be lower than smaller ones, but figures below 1% are not uncommon.

Morgan Stanley estimated that the CATL listing could raise up to $7.7bn, marking one of the largest offerings in the sector in recent years and giving the Shenzhen-listed company access to capital. exports as it seeks to expand overseas. CATL announced its plans in December, and a listing is expected later this year.

Bankers say Chinese banks are willing to accept lower fees for a large offering as the business is small and the IPO market is yet to recover from the mainland. The director of one European bank that stopped said it was not surprising to see quiet fields “because most of their Chinese onshore team has a lot of capacity but there is no agreement”.

US banks plan to work on the deal even though the Pentagon this month added CATL – a supplier to Tesla, Volkswagen and Ford – on the blacklist of companies it says are linked to the Chinese military.

Interest among other US institutional investors for distribution has also not wavered, according to bankers involved. The defense department’s list only prohibits designated individuals from doing business with the US military and has no direct legal consequences, but it does carry a reputational risk.

CATL it said in a statement that it “has never been involved in business or any activities related to the military”, the move was “a mistake” and was expected to have “no negative impact on our business” .

The battery pioneer has shelved an initial plan to sell up to $5bn in Swiss global depositary receipts by 2023 after regulatory concerns over large offerings.

On average, banks would reduce or receive at least a one-digit fee on the Hong Kong list, according to investment banks and prospects filed on the exchange by 2024.

The CEO of one participating bank described the CATL listing as a “money-defining contract” and said bankers would want to participate despite the low fees.

Banks also have an incentive to be active in the hope of future business with CATL, such as potentially lucrative block trades.

“Everyone is just looking for credits on the league table, they are not trying to make money on this deal,” said one senior Chinese banker familiar with the scene. “It is very annoying to see some peers breaking the rules, but there is nothing we can do about it.”

Bank of America, JPMorgan, Goldman Sachs and CICC declined to comment. CSC and CATL did not respond to requests for comment.