On April 3, the cross-border capital pool system of Industrial Bank (IB) was launched officially. The bank handled the first transaction of cross-border foreign exchange funds aggregation for a multinational group in Sichuan on the same day. This marks the major breakthrough made by IB in cross-border financial services, and the bank can meet the global cash management needs of multinational groups and large domestic groups both in home and foreign currencies at home and abroad.
According to the introduction of the officer of IB in charge of the development project of cross-border capital pool system, enterprises can, via the system, easily realize a range of cross-border capital management functions for the foreign exchange capital of members both at home and abroad, such as aggregation and allocation, automatic control of net capital inflow and outflow limits, and centralized processing of exchange receipt and payment under the current account, and centralized handling of foreign exchange settlement and sale of group members. This system can improve the return rate of capital and convenience of transferring capital cross borders, reduce the cost of exchange payment and operation, and lower the exchange rate risks effectively.
“The system is designed based on the latest administration framework of the State Administration of Foreign Exchange in 2014, thus it better meets the actual needs of enterprises and is more convenient.” The above officer said that the system could not only transfer the capital of group members in an effective manner, make adjustment between surplus and shortage, and lower the financial cost, but also realize willingness exchange settlement and sale and centralized exchange settlement and sale, and reduce the loss of exchange rate burdening enterprises. In addition, as IB is a member bank of the domestic foreign currency payment system, and its principal accounts and sub-accounts can realize capital transfer on a real-time basis both at home and abroad without resorting to other banks.
In recent years, Chinese-funded enterprises went abroad and started multinational operation and foreign-funded multinationals came into China, so multinationals have increasingly pressing needs related to the centralized management and operation of capital both at home and abroad. The State Administration of Foreign Exchange promulgated the Provisions on the Centralized Operation and Management of Foreign Exchange Funds of Multinationals (Trial) in 2014, deepened pilot reform in the centralized operation and management of foreign exchange funds of multinationals to provide policy support for domestic multinational groups to carry out the business of cross-border foreign exchange capital pool.
According to the statistics of the Ministry of Commerce and the State Administration of Foreign Exchange, Chinese investors altogether made direct investment in 6,128 oversea enterprises in 156 countries and regions around the globe in 2014, with their direct investments overseas hitting USD 116 billion in all industries, registering a YoY increase of 15.5%. With the implementation of the national strategy of “One Belt One Road”, it will boost more Chinese enterprises to “go global”. Facing this huge market, all large banks at home are making active arrangement.
IB, which is located at the core area of Maritime Silk Road, has grasped the above strategic opportunities and brought into play its specialized advantages in cash management and trade finance, thus the cross-border capital pool system came into existence in a timely manner.
Vice President Lin Ronghui of the Corporate Finance Headquarters of IB indicated: “In order to help enterprises to ‘go global’, next, the bank will, targeting at multinationals and large domestic group corporations, develop and provide service solutions for global capital both in home and foreign currencies covering a number of special foreign exchange functions such as all-currency account management, multi-strategy capital aggregation and allocation, internal banking, centralized exchange receipt and payment, and exchange settlement and sale.”