Making Full Use of Overall Advantage to Diversify Products and Services
Since the launch of RMB settlement in cross-border trade pilot program, by making full use of overall advantage, and strengthening cooperation and linkage among its overseas and domestic branches, Bank of China has achieved rapid increase in business size, increasing diversified products and services, more and more extensive clearing channels, expanded customer base step by step, sound and orderly running of systems, and rapid development of business.
Domestic branches' transaction volume remains the market-leading position. Bank of China seized the market development opportunity to successfully handle the first transactions of RMB settlement in cross-border trade in all pilot regions in China and a couple of countries and regions abroad. In 2010, the domestic branches' transaction volume exceeded RMB 160 billion, increasing by over 100 times than that of 2009, and it continued to maintain the market-leading position.
Overseas RMB services are flourishing. Bank of China (Hong Kong) Limited under the Bank of China Limited, gives full play to its advantage of being the unique RMB clearing bank in Hong Kong, realizing a leapfrog development in its RMB services. In 2010, Bank of China (Hong Kong) Limited, as the participating bank and the clearing bank, handled a transaction volume of RMB 350 billion, and the market share of the RMB settlement in cross-border trade and RMB deposits remained the market-leading position.
In 2009 Jakarta branch handled China s first transaction of overseas RMB financing, and since then on, other overseas branches of Bank of China have actively promoted this business and made a break-through.
RMB clearing network covers the whole globe. Bank of China owns more than 10,000 domestic outlets and over 900 overseas institutions covering Hong Kong, Macao, Taiwan and 31 countries in the world, and it maintains business relationship with over 1,600 head offices and branches of foreign banks. Up till now, Bank of China Limited has established 352 cross-border RMB clearing accounts, remains the leading position in the market, and its account opening banks can be found in 40 countries and regions in Asia, Europe, America, Oceania and Africa.
Customer base is continuously strengthened and expanded. In 2010, the domestic institutions of Bank of China handled tens of thousands of transactions of RMB settlement in cross-border trade for thousands of customers in various industries including electrical engineering, communication equipment, electronic products, transportation and communication, chemical engineering, manufacturing and wholesale & retail, and its customers can be found in over 70 countries and regions.
Financial products and services are continuously innovated. All the existing products of Bank of China concerning international settlement and trade finance are applicable to RMB settlement in cross-border trade. According to the requirement of specific projects, Bank of China can work out domestic and overseas all-round cross-border product portfolio schemes for customers in consideration of their actual conditions, provide various overseas RMB deposits, financing, cash distribution, clearing and fund products.
In addition, it can provide customers with comprehensive high-quality financial services based on the synergistic effect of multi-faceted platforms of investment banks, fund, insurance, investment and leasing.
Professional skills and brand advantages are prominent. International settlement is a traditional advantageous service of Bank of China. Its international settlement volume remains the leading position in global market for several consecutive years, and the market share of its domestic branches in international trade settlement, foreign currency trade finance and foreign currency letter of guarantee stably ranks first among the peers.
Bank of China owns a high-quality expert team in international settlement field and rich experience of handling cross-border trade, and it has won many prizes for financial services such as the "Best Trade Finance Bank in China", "Best International Business" and "Best RMB Settlement in Cross-border Trade".
In the international banking industry, it has a prominent reputation and good brand image.
In 2011, Bank of China will continue its product innovation, enhance its international competitiveness, consolidate its leading advantages of services, and give play to its function as the main channel for RMB settlement in cross-border trade. It will continue to provide customers with high-quality, comprehensive and efficient services of trade finance, and strive to become a top-ranking international bank in trade finance field.
Background Materials on Press Conference of Bank of China's Cross-Border RMB Settlement
I. Grasping Market Opportunities to Accelerate Development of Cross-Border RMB Settlement
Currently, as the world economy enters the post-crisis era with deep economic integration, the emerging markets and developing countries have increasing demand for strengthening regional currency cooperation, and the international monetary system shows the trend of diversification.China s fast and long-term economic growth, large trade scale, strong RMB exchange rate and the domestic and overseas market environment all created the favorable conditions for RMB to go to the outside world.
In July 2009, China's cross-border RMB trade settlement pilot program was officially launched. Bank of China's Shanghai branch and Bank of China (Hong Kong) Limited jointly processed China's first cross-border RMB trade settlement transaction, starting the function of RMB in international trade settlement.
In 2010, the pilot program was extended to 20 domestic provinces (autonomous regions, municipalities) as well as all the overseas regions, covering all the RMB settlement for cross-border goods trade, service trade and other current account as well as capital account of specific pilot programs, with the RMB having quotations against MYR, RUB and other small currencies.
The program allowed three types of overseas institutions to make RMB investment in the inter-bank bond market, and promulgated the pilot management methods of RMB bank settlement account of overseas institutions and relevant policies.By the end of 2010, China's cross-border RMB trade settlement amount had been approximately RMB 510 billion, and the RMB offshore market had taken shape, with the whole business maintaining the rapid, orderly and healthy development.
In January 2011, the People's Bank of China promulgated the Management Methods of Offshore Direct Investment RMB Settlement Pilot Programs, providing policy support to in-depth development of cross-border RMB investment and financing.Generally, RMB is playing an increasingly important role in the cross-border trade and investment and is gradually accepted worldwide.
RMB "going out" is inevitable for China's long-term economic development and will see a faster speed.
Complying with the market development, Bank of China has always attached high importance to the business. The relevant departments of its head office and overseas and domestic branches actively cooperate with each other to expand the business scale quickly, enrich the product and service types and develop clearing channels and customer bases, realizing a sound system operation and relatively rapid business development.
In 2010, Bank of China's domestic institutions grasped favorable opportunity of the expansion of the cross-border RMB settlement pilot program to conduct first transactions of the kind in the extended pilot places of China successfully. At present, Bank of China can provide comprehensive cross-border RMB settlement and financing services to all the import and expert pilot enterprises in the 20 provinces (autonomous regions, municipalities) across China.
The amount of cross-border RMB settlement transactions processed by Bank of China's domestic institutions exceeded RMB 160 billion in 2010, surging by more than 100 times than that of 2009, owning customers of over 70 countries and regions and market share leading in the industry.More specifically, the business volume under current account was approximately RMB 150 billion, mainly consisting of the import trade settlement.
The transactions under capital account approved for specific programs developed rapidly, with their business scale surpassing RMB 10 billion. In terms of different branches, Bank of China's Guangdong branch witnessed its business volume exceeded RMB 30 billion, while the business volume in Shenzhen and Beijing were both over RMB 20 billion, and the business volume in Shanghai, Hainan and Suzhou broke through RMB 10 billion.
In 2010, Bank of China (Hong Kong) Limited gave full play to its distinctive advantage of being the sole RMB clearing bank in Hong Kong. All types of RMB businesses achieved tremendous development, and the market shares of cross-border RMB trade settlement and RMB deposits business both maintained the leading positions in the market.
During the year, as the participating bank and clearing bank, Bank of China (Hong Kong) Limited processed transactions with total amount of approximately RMB 350 billion and established a comprehensive RMB product system involving deposits, loans, international settlement, capital, credit cards, insurance and funds, forming a distinctive competitiveness.
Bank of China (Hong Kong) Limited deeply understood relevant policies, explored customers' demands and successfully helped the customers complete Hong Kong's first RMB trade finance transaction, RMB export invoice trade finance transaction, RMB import invoice trade finance transaction and RMB working capital loan transaction and then promoted the RMB syndicated loan, RMB dividend remittance and other associated financial services.
Bank of China (Hong Kong) Limited took the lead in fixing CNY HIBOR as the benchmark interest rate in RMB trade finance and loans service, improved transparency of RMB loan interest rate, and is the first to provide foreign exchange services under the non-trade transaction to non-individual customers according to the overseas customers' needs, having been maintaining the position of market maker of RMB non-trade foreign exchange services.
For overseas RMB bond issuance, Bank of China (Hong Kong) Limited helped Hopewell Highway Infrastructure Limited under Hopewell Group issue the first RMB bonds in Hong Kong as the exclusive leading bank in July 2010, realizing the joint innovation of banks and enterprises and setting a good example for the market.
As the pioneer of RMB bond underwriting in Hong Kong, Bank of China (Hong Kong) Limited actively pushed forward the development of RMB bond issuance.In addition, the bank launched the "Bank of China (Hong Kong) RMB Offshore Bond Index" at the end of 2010, which is the first index for RMB offshore bond in Hong Kong giving the overall reference to RMB bond market trend for investors.
In 2010, the other overseas institutions of Bank of China were also deeply aware of the RMB "going out" trend and actively developed the cross-border RMB business under the guidance of the local supervision authority.During the same year, the amount of cross-border RMB settlement transactions processed by the other overseas institutions except Bank of China (Hong Kong) Limited was approximately RMB 23 billion.
The global RMB clearing network with Bank of China (Hong Kong) Limited and Bank of China's Shanghai branch as its centers was primarily formed. The business regions extended significantly from the Asian Pacific region to Europe, Africa, Australia and America, with all types of international settlement products including remittance, collection, Letter of credit and letter of guarantee.
Driven by the cross-border RMB settlement, the overseas RMB deposit, exchange, cash distribution, loan, lending and clearing services develop well. Singapore branch and Macau branch cooperated with the domestic branches to develop cross-border RMB service package, with their business scales reaching tens of billion yuan respectively.
The Manila branch saw prosperous development of RMB cash distribution business.After the Jakarta branch conducted the first overseas RMB finance business in 2009, Bank of China strengthened the promotion of the business. By now, Bank of China's institutions such as Shanghai branch, Jakarta branch, Bank of China (ELUOSI), Paris branch and Johannesburg branch have tried to develop the cross-border and overseas RMB finance business and made breakthroughs, providing the "going out" Chinese-funded enterprises and the overseas customers with RMB capital support.
The business covers RMB export buyer's credit, overseas RMB working capital loan, etc. During the period since Bank of China (ELUOSI) started developing RMB business in local market on December15, 2010 till the end of 2010, the accumulated amount and number oftransactions are RMB 27.66 million and 125 transactions respectively, taking up 70% and 74% of the market share.
II. Consolidating and Enhancing Market Leadership by Giving Full Play to Traditional Advantages
With more than one year of development of the pilot business, Bank of China has owned its own competitive advantages in clearing channels, customer bases, financial products, professional skills, brand image, etc., laying a solid foundation for the consolidation and enhancement of its market leadership.
First, market pioneer advantage. As placing emphasis on market research and precise grasp of policies to make layout and overall arrangement in advance, Bank of China has successfully handled the first transactions in all domestic pilot areas and a couple of countries and regions abroad, and taken the lead in launching corresponding products and services of cross-border RMB settlement, overseas RMB loan services, etc., leading the development of market.
Second, clearing network advantage.Bank of China owns nearly 10,000 domestic outlets, more than 900 offshore institutions across Hong Kong, Macao, Taiwan and 31 countries in the world, and maintains business contact with over 1,600 headquarters and branch offices of foreign banks, creating favorable conditions for the expansion of RMB business throughout the world.
Bank of China (Hong Kong) Limited and Macau branch are the sole RMB clearing banks in Hong Kong and Macao respectively designated by the People's Bank of China. Up to now, Bank of China has totally opened 352 cross-border RMB clearing accounts, which include 255 first-class clearing accounts and 97 second-class clearing accounts, and thus maintaining its leading position in market.
And the overseas participating banks that have opened RMB clearing accounts with Bank of China can be found in 40 countries and regions in Asia, Europe, America, Oceania and Africa.
Third, customer resources advantage. International settlement is the traditional dominant business of Bank of China. The bank's international settlement volume has been among the highest in the global market for successive years. Moreover, Bank of China ranks first in the domestic industry in terms of the market shares of international trade settlement, foreign currency trade finance, and foreign currency letter of guarantee.
Many domestic foreign-trade enterprises and "going out" enterprises all take Bank of China as their main cooperative bank for developing the international business.All of these have laid a solid foundation for Bank of China to expand customer base of cross-border RMB business.In 2010, the domestic institutions of Bank of China handled more than 10,000 cross-border RMB settlement transactions involving letter of credit, collection, and remittance for thousands of customers in various industries including electrical engineering, communication equipment, electronic product, transportation and communication, chemical engineering, manufacturing, and wholesale and retail.
By cooperating with the domestic institutions, overseas institutions of Bank of China actively developed the business with overseas counterparties of domestic customers and expanded their overseas customer bases.
Fourth, financial products advantage.Under the premise of meeting regulatory requirements, Bank of China can provide enterprises with various products related to cross-border RMB business, such as loans, settlement, financing, guarantee, capital, fund and wealth management products. All the existing international settlement and trade finance products of Bank of China are applicable to cross-border trade RMB settlement services.
According to the requirements of specific projects, Bank of China can work out domestic and overseas cross-border product portfolio schemes in consideration of customers actual conditions, and provide various products, including overseas RMB deposits, finance, cash distribution, settlement and fund products.
Moreover, by giving full play to the comparative advantage of diversified services in competition, and making use of the synergistic effect of multi-faceted platforms integrating investment bank, fund, insurance, investment and lease, etc., Bank of China provides customers with comprehensive and excellent financial services and facilitates enterprises trade and investment.
Fifth, expertise advantage. Bank of China boasts a high-quality and professional expert team in international settlement and rich experience in cross-border trade. It has won many prizes for the financial services such as the "Best Trade Finance Bank in China", "Best International Business" and Best RMB Settlement in Cross-border Trade ", and thus wins excellent international reputation and good brand image in the international business field. All of these have created a good foundation for the development of cross-border RMB business of Bank of China.
III. Developing the Main Channel for Cross-Border RMB Settlement through Innovative Development
With rapid development of RMB "going out" and in-depth implementation of cross-border RMB pilot policy, the domestic and foreign enterprises' demand for cross-border RMB financial services and products has been increasing with each passing day, which provides a broad space for Bank of China to develop international business.
In 2011, Bank of China will continue grasping market opportunities, adhere to "innovative development, transformational development, and cross-border development", push forwards domestic and overseas professional management, intensive management and integrated development, creating differential competitive advantages and striving to play the dominant role in cross-border RMB settlement.
First, to meet customer demands, and enhance product innovation.With the increasing degree of international acceptance of RMB, enterprises also put forward more and more demands for various RMB financial products.Commercial banks shall improve their capabilities in product innovation and customer service continuously according to policy development and market changes in the future.
In consequence, commercial banks are required to carry out research on account management, RMB wealth management, investment and financing, capital lending, and other financial institution and enterprise oriented products; to enhance innovations on RMB trade finance products corresponding to cross-border RMB settlement, financing and capital portfolio scheme under cross-border RMB settlement, deposit and financing products on the basis of RMB offshore accounts; as well as to conduct research on RMB cross-border cash management, investment and other relevant products, etc.
Second, to strengthen infrastructure construction and improve service capabilities.Bank of China will continuously promote the development of RMB clearing channel network so that the going-out enterprises can enjoy the convenient clearing and financing services across the world; will strengthen the risk management and internal control, especially on market risks, legal risks, operational risks, etc.
; and guarantee the supporting system, improve staff training, efficiency and service quality, as well as provide high value-added financial services to the going-out enterprises through the cross-border RMB business expert team.
Third, to make in-depth study on policies and conduct market cultivation well.It is required to cooperate with the regulatory departments to promote the pilot cross-border RMB business and further relevant policy study, establish and perfect RMB quotations and unwinding mechanisms against small currencies of neighboring countries, actively carry out customer-oriented policy propaganda and product promotions to help customers acquire relevant policies and product categories.
Bank of China aims to make full use of its advantages, maintain the leading position by developing pilot business, and further expand the international market.
Bank of China will continue grasping favorable historic opportunities, carry out product innovation, increase international competitiveness and consolidate its leading position in business, with the purpose of becoming the clearing bank, the supplier of RMB capital and cash as well as the provider of main services and products in overseas RMB business.
It will give full play to its function as the main channel for cross-border RMB settlement, continue to provide customers with high quality, comprehensive and efficient trade services, and strive to become a top-ranking international trade finance bank.