On October 13, at a press briefing hosted by the Shanghai Banking Association, Wang Rong, Deputy President of the Agricultural Bank of China (ABC) Shanghai Branch, stated that the branch is anchored in the strategic positioning of “handling Shanghai-based businesses for all ABC’s domestic clients and global businesses in Shanghai”, firmly pursues the business strategy of “international business cross-border development”, and comprehensively elevates its cross-border financial service capability.

ABC’s client base is mainly concentrated in county-level areas. Why is it focusing heavily on cross-border finance? “ABC’s traditional strengths lie in county and urban-rural markets, yet this heritage does not hold us back from excelling in cross-border finance,” Wang Rong acknowledged. As a state-owned bank connecting China’s county markets, urban markets and international markets, ABC would risk losing its traditional county clients if it stayed away from cross-border finance.

In Wang Rong’s view, the business positioning of ABC Shanghai Branch is not to chase scale, but to serve as a window and brand platform for the whole ABC Group’s external services. “Many multinational corporations locate their China headquarters in Shanghai, and outbound enterprises in the Yangtze River Delta mainly arrange exports via Shanghai. Therefore, ABC Shanghai Branch aims to become the hub of the ABC Group for serving global clients.”

It is learned that ABC Shanghai Branch has identified cross-border finance as one of its three priority areas for reform and transformation. In September last year, it set up an Offshore Business Center in the Lingang Special Area. Adopting an integrated collaborative operation mechanism featuring “overall planning by the branch, dedicated handling by the center, local support and joint handling with overseas affiliates”, together with a professional service team, the center provides full-chain, one-stop cross-border and offshore financial services for domestic and overseas multinational groups.

In terms of business performance, ABC Shanghai Branch has rolled out a number of market-first deals under new regulatory policies including upgraded FT accounts and green external debt. Its volume and client base under current-account pilot businesses rank among the top within the ABC system and local peers. More than 100 enterprises have completed filing with the branch, and its innovative capital-account business leads local peers in both deal volume and coverage. On exchange rate risk hedging, the branch has helped over 600 enterprises benefit from relevant policies this year, cutting their financial costs by nearly RMB 20 million. By the end of the third quarter, the FX hedging ratio of its corporate clients exceeded 30%, up more than 10 percentage points year on year.

Wang Rong summarized the “three transformations” of the branch’s cross-border business: shifting from single-product services to integrated cross-border services, from simple price competition to enhancing client value, and from fragmented local services to globalized services. “Previously, when clients settled US dollar receipts, a favorable exchange rate offer would suffice. Nowadays, enterprises demand comprehensive services such as exchange rate risk hedging, cost reduction, market expansion and legal consultation,” he illustrated.

Wang Rong disclosed that ABC Head Office has recently approved an action plan for supporting offshore finance development under the Shanghai International Financial Center initiative. The plan grants support to ABC Shanghai Branch in institutional setup, non-resident lending and development of free-trade offshore bonds. This is not merely an arrangement for the Shanghai Branch alone, but differentiated group-level support from ABC for Shanghai.

Looking ahead, Wang Rong said ABC Shanghai Branch will continue to take financial reform and innovation as driving forces, support the steady advancement of RMB internationalization via high-quality cross-border and offshore financial services, and contribute ABC’s share to building Shanghai into a fully functional, opening-up-leading and globally radiating international financial center.

Source: Shanghai Securities News