|The 2013 guide to Liquidity Management|
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As a result, the company reduces trapped cash a common problem faced by global corporates enabling greater working capital efficiency. The structure means that Shell can enhance its liquidity through the automatic sweeping of its onshore and offshore excess foreign currency (within an approved foreign debt quota and overseas lending quota). It will not only simplify the process of quota registration, drawdown and repayment, but will also reduce the cost of funds and enable greater working capital efficiency.
"The ability to effectively manage excess foreign currency liquidity globally is paramount to optimising cash management for multinationals," says Sridhar Kanthadai, regional head, transaction banking, North East Asia, at Standard Chartered. "This will encourage them to increase their trade and investment in China as it gradually opens up to the rest of the world. This scheme is a significant step that reiterates the commitment and intent by China to support global companies in helping them integrate their financial practices. It also signifies how China is establishing its position as an international financial centre."
In July, Standard Chartered took advantage of another regulatory change when it completed a cross-border lending deal for a worldwide manufacturer. Renminbi cross-border lending business enables foreign and local multinationals to lend renminbi to their overseas companies: as a result they can make full use of surplus renminbi in mainland China and support their needs for renminbi in offshore markets. The deal allows the manufacturers headquarters in China to lend a total amount of RMB2.7 billion to offshore related companies with a tenor of one year.