The Implementation of Cross-Border Funds to Facilitate Collection and Payment, the First Batch of Domestic Trade Financing Assets Cross-Border Transfer Business Successfully Landed

Shanghai Lingang   2020-08-26

February 14, 2020, The People's Bank of China, the Bank of China Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange and the Shanghai Municipal People's Government jointly issued the "Opinions on Further Accelerating Shanghai's International Financial Center and Financial Support for the Integrated Development of the Yangtze River Delta" (Yinfa [2020] No.46, hereinafter referred to as "Financial Article 30"), We will clearly support the pilot implementation of cross-border transfer of domestic trade financing assets in the new Hong Kong-based zone and promote the development of RMB cross-border trade financing business. On 31 March, The Shanghai Headquarters of the People's Bank of China issued the "Operational Guidelines for Cross-border Transfer of Trade Financing Assets in Lingang New Area of China (Shanghai) Pilot Free Trade Zone (Trial)" (hereinafter referred to as the "Operational Guidelines"), On the day of the release, the new branch of Bank of Communications transferred the domestic letter of credit Forfaiting assets totaling 10 million RMB to the Sydney branch of Bank of China and the Macao branch of Bank of Communications respectively. The Shanghai Branch of the Bank of China took the lead in handling the cross-border transfer of domestic securities and Forfaiting assets for the new district enterprises Ecosen (Shanghai) Enterprise Management Co., Ltd. And Shanghai Yuanyi International Trade Co., Ltd. And successfully landed the first cross-border transfer of domestic trade financing assets in Lingang New District. The new district branch of China Construction Bank handled the first domestic letter of credit Forfaiting block chain cross-border transfer business for Shanghai Waigaoqiao Shipbuilding Marine Engineering Co., Ltd., a new district enterprise, through the block chain trade finance platform.

1. Main Practices

Contents of Cross-border Transfer of Domestic Trade Financing Assets

The "Business Operation Guidelines" specify that the types of assets include domestic letter of credit Forfaiting and domestic letter of credit risk participating assets at the initial stage. Cross-border transfer of other types of trade financing assets will be launched according to the principle of "one mature item, one launched". In the pilot business in Lingang New Area, the underlying assets are domestic trade financing assets, which are denominated in RMB. The domestic letter of credit Forfaiting and risk participation in the cross-border transfer of the two types of assets will be liberalized first. In addition, the transfer of trade financing assets in Lingang New Area can be operated across borders in two directions. Overseas institutions are not limited to financial institutions and accept a wider range of overseas investors. Under this background, enterprises can combine domestic and international financial markets, match the most suitable financing methods and choose the most favorable financing funds.

The First Cross-border Transfer of Domestic Service Trade Financing Assets

After arrangement, Bank of Communications finally locked in the domestic letter of credit business of Shanghai Changqiang Heavy Industry Machinery Co., Ltd. To pay service trade processing fees. On March 31, Bank of Communications New Area Branch transferred a total of 10 million RMB of domestic letter of credit Forfaiting assets to Bank of China Sydney Branch and Bank of Communications Macao respectively, successfully landing the first cross-border transfer of domestic trade financing assets in Lingang New Area. The business link starts from the opening of a domestic letter of credit for the company to the transfer of cross-border assets and the submission of regulatory data. The link covers the whole process of "self-opening of domestic letters of credit + forfaiting trade financing + cross-border transfer of trade financing assets", and one of the trade financing assets is transferred to overseas peers. The highlight of this business is to be able to better understand the overseas regulatory policies and the operating points, handling efficiency and financing price of the cross-border transfer of service trade financing assets by peers. Compared with the cross-border transfer of domestic forfaiting assets under the traditional goods trade, it is of more practical breakthrough significance.

Help Commodity Enterprises Reduce Financing Costs

Exson (Shanghai) Enterprise Management Co., Ltd., an enterprise in Lingang New Area, was born out of Louis Dreyfus Group, an international bulk trading giant. It is now mainly engaged in the wholesale trade of metals and mineral products and has been operating in the bulk commodity industry for many years. Enterprises with international trade as their main business need long-term and large-sum rolling capital support to expand their business scale, and are more sensitive to financing costs. BOC Shanghai Branch learned that Ecoson (Shanghai) has a demand for domestic L/C Forfaiting financing business based on domestic trade. And there are certain requirements on the financing price, Give full play to the Group's advantages of globalization and integration, In the first place, BOC Macao Branch and Tokyo Branch, relying on their profound experience and market reputation in the fields of trade finance and cross-border RMB, handled the cross-border transfer of domestic letter of credit Forfaiting assets for the enterprise, helping enterprises in the new area to enjoy policy dividends and reduce financing costs in the first place.

Using Block Chain Technology to Improve the Security and Timeliness of Cross-border Transfer of Domestic Trade Financing Assets

In March this year, Shanghai Waigaoqiao Shipbuilding Marine Engineering Co., Ltd. Received a domestic letter of credit issued by its parent company to pay for the project. Due to the need for the use of funds, Waigaoqiao Marine Engineering applied to CCB's new district branch for payment of the domestic letter of credit. To reduce customer financing costs, The Shanghai Branch of China Construction Bank, in conjunction with the Malay Branch of China Construction Bank, successfully handled the first domestic letter of credit Forfaiting block chain cross-border transfer business for Shanghai Waigaoqiao Shipbuilding Ocean Engineering Co., Ltd., a high-quality enterprise in Lingang New Film Zone, through the block chain trade finance platform, taking advantage of the financial advantages of Malay Labuan offshore finance. The highlight of this business lies in the combination of new block chain technologies and trade finance, Penetrating supervision of the whole process of trade finance has solved the industry pains and difficulties in identity authentication, information transmission, data security and other aspects of traditional inter-bank trade finance, enabling enterprise customers to effectively enjoy the convenience, timeliness and security of operation brought by new policies and technologies.

Cross-system Asset Transfer Helps High-end Marine Equipment Enterprises Reduce Costs

Sinoman Oil and Gas Group Co., Ltd. Plans to purchase raw materials from its subsidiary Sinoman Oil Equipment Group Co., Ltd. Sinoman Petroleum Equipment is registered in the new area. Due to the influence of epidemic, customers are relatively short of funds and have submitted a one-year loan demand of 10 million RMB to Huaxia Bank Lingang Sub-branch. At present, the overseas institutions of Huaxia Bank are still in their infancy. Therefore, the Shanghai Branch of Huaxia Bank is responsible for this single business. Huaxia Bank Shanghai Branch sorted out the list of overseas banks that signed the Forfaiting Agreement in the first place. Actively contacted a number of overseas correspondent banks, overcame different restrictions and requirements of policies and laws in different regions, and finally chose BOCOM Macao as the counterparty through comprehensive comparison, completing the Cross-border transfer of domestic trade financing assets, making the comprehensive financing cost of customers less than 3%.

2. Practical Effect

After the pilot project of cross-border transfer of trade financing assets is launched in Lingang New Area, banks can compare the prices of domestic and overseas financing funds and transfer trade financing assets to overseas investors under appropriate conditions, eventually reducing the financing costs of enterprises that generate the original assets. Following the landing of the first cross-border transfer of domestic trade financing assets, In the first half of 2020, the new branch of BOCOM will be Shanghai Xinyao Industrial Co., Ltd., Shanghai Siwei Digital Graphic Co., Ltd., Nanchang Hua Qin Electronic Technology Co., Ltd., BOC Shanghai Branch handled the business for Shanghai Yuanyi International Trade Co., Ltd. And other enterprises. According to the enterprises, by handling the cross-border transfer of domestic trade financing assets, its trade financing cost was reduced by about 0.2% to 0.5%, providing a solid guarantee for enterprises to resume work and production. This policy can help enterprises to enjoy the policy dividend in the first place, and provides a good example for enterprises in Lingang New Film Zone to further reduce financing costs through the transmission mechanism of interest rate pricing by making use of "two markets and two resources" at home and abroad.