At a recent press briefing hosted by the Shanghai Banking Association, senior representatives from seven banks took turns to speak. Covering large state-owned commercial banks, joint-stock commercial banks, policy banks and foreign-funded banks, all institutions placed cross-border finance at the forefront of their strategic priorities.

Against a backdrop of low interest rates, cross-border finance has evolved from an optional business line into a mandatory undertaking for banks. Currently, cross-border finance in Shanghai is presented with strategic opportunities amid higher-level institutional opening-up. The development of Shanghai as an international financial centre also provides a testing ground for banks’ cross-border financial innovations.

Banks Leverage Strengths in Cross-border Financial Services

Shanghai serves as a key origin for Chinese enterprises going global, with a large number of local firms accelerating their global industrial layout. Nevertheless, enterprises venturing overseas face multiple challenges, involving not only capital issues but also a host of non-financial needs covering taxation, legal affairs, industrial and commercial administration and more.

To meet the diverse demands of enterprises’ global deployment, the Shanghai banking sector is prioritising the transformation of cross-border financial services. Chen Zhineng, President of Bank of China Shanghai Branch, explained that the branch has focused on building end-to-end comprehensive overseas expansion services. It has established a full-service chain covering “domestic plus overseas” and “financial plus non-financial” offerings. Leveraging products such as settlement in 34 currencies and foreign exchange purchase and sale, the bank aims to resolve enterprises’ cross-border settlement pain points.

A series of cross-border financial initiatives have yielded tangible results. Pang Shuqin, President of China Exim Bank Shanghai Branch, noted that since the start of the 14th Five-Year Plan period, the branch’s cross-border RMB business has maintained growth, with annual average growth of cross-border settlement volume hitting 20%. Zhu Mingyi, President of China CITIC Bank Shanghai Branch, stated that the branch’s overseas loans registered an average annual growth rate exceeding 30% over the past three years. Financing for overseas enterprises has surpassed RMB 60 billion, and overseas RMB loan disbursement accounts for over 50% of its total overseas lending this year.

To further upgrade cross-border financial services, Agricultural Bank of China Shanghai Branch has adopted the strategic positioning of “serving national ABC clients and handling global businesses in Shanghai”, listing cross-border finance as one of the three key areas for reform and transformation. Shanghai Pudong Development Bank (SPD Bank) Shanghai Branch ranks cross-border finance first among its five flagship business lines. It has deepened cross-border finance practices centred on four priorities: facilitation, intelligence, branding and intensive management.

Experiences from foreign-funded banks offer valuable references. Lu Jing, Chief Executive of Standard Chartered China, said the bank was among the first to participate in FT account upgrades and promptly rolled out the “FT Account 2.0” solution. It also supported the issuance of the world’s first RMB Magnolia Bond. Zhang Wenjie, Chief Executive of Citi China, stated that its Shanghai branch has supported cross-border capital pooling operations for 38 multinational corporations and was among the first batch of institutions to implement the new policy for cross-border domestic and foreign currency capital pools in September this year.

Exploring New Paths via Offshore Finance Initiatives

In June this year, the Action Plan for Developing Offshore Finance to Build Shanghai into an International Financial Centre, jointly issued by the People’s Bank of China, the National Development and Reform Commission, the State Financial Regulatory Administration and the China Securities Regulatory Commission, supports Shanghai to pilot offshore finance. Centred on six pilot business lines, the Shanghai banking sector is accelerating innovations in offshore finance.

Large state-owned banks are building rules and frameworks for offshore finance.

Bank of China has incorporated offshore finance into the core layout of the Group’s global strategy and established a three-tier implementation framework: “headquarters for overall coordination, Shanghai Branch as the main delivery hub, and global affiliates for collaborative linkage”. Bank of China Shanghai Branch has set up a dedicated offshore finance taskforce, achieving horizontal integration across front, middle and back offices, vertical coordination with the headquarters and group comprehensive subsidiaries, and external links with major global offshore hubs including Hong Kong, Singapore, London and Frankfurt. It has built an integrated offshore service network connecting domestic and overseas markets.

Wang Rong, Deputy President of Agricultural Bank of China Shanghai Branch, disclosed that ABC Headquarters has recently approved the relevant action plan to support offshore finance development for Shanghai International Financial Centre. The headquarters will provide support to ABC Shanghai Branch in institutional setup, non-resident lending and the development of FT offshore bonds.

As one of the first licensed financial institutions authorised to conduct offshore business, Wang Sunan, President of SPD Bank Shanghai Branch, said SPD Bank boasts three strengths in offshore finance: licensing advantage, FT account system advantage and overseas network layout advantage. Going forward, the bank will shore up weaknesses in serving enterprises “going global” and contribute to elevating the status of Shanghai International Financial Centre.

Looking ahead, Pang Shuqin said China Exim Bank Shanghai Branch will further fulfil its policy-based financial mandate, continuously innovate cross-border financial products, optimise full-chain RMB services and support high-level opening-up in Shanghai. Chen Zhineng remarked that Bank of China Shanghai Branch will deepen pilot exploration of offshore finance, actively participate in innovation pilots for factor markets, speed up innovations in cross-border financial services, products and scenarios, and inject fresh momentum into the upgrading of Shanghai International Financial Centre.

Source: Shanghai Securities News