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International banks intensify cash-management efforts in China

The Royal Bank of Scotland (RBS) has launched a new electronic banking product to support companies operating in China, the latest move by an international bank to improve their cash-management offering in the country.

The new digital product essentially enables a corporate treasury to consolidate multiple, and often incompatible, electronic banking platforms it has with local Chinese banks under one online channel provided by the UK bank.

Its capabilities include bank account transaction reporting, payment initiation and automated cross-bank sweeping. RBS says the platform can support up to 18 local Chinese banking platforms, and it can help improve corporate treasurer’s cash and liquidity management in the country.

“By providing clients with full visibility of their cash flow with local Chinese banks, we are able to offer automated cross-bank cash sweeping that can maximize returns on their aggregated deposit balances with RBS,” says Jonathan Jiang, RBS’s head of global transaction services, China.

The product is fully integrated into RBS’s existing electronic banking platforms, including Access Online, host-to-host channel Access Direct and Swift Corporate Access. It also supports various industrial standard payment formats, including SAP, XML and EDI.

RBS follows banks such as Citi, HSBC and most recently Deutsche Bank, which have launched new cash-management services for multinationals operating in China – services that are designed to enable the movement of renminbi-denominated cash more easily between onshore and offshore accounts.

Corporate treasurers have long been frustrated by the restrictions and complexities of moving RMB-denominated cash in and out of China, but recent moves by the Chinese authorities to address this has enabled transaction banks to launch automated RMB cash-sweeping services for the first time.

Citi was the first international bank to launch an automated two-way service for RMB cross-border sweeping in September. HSBC followed in January, and in February Deutsche Bank introduced its own automated RMB cash-sweeping services for cross-border lending to its corporate clients in China. All three services are geared to enhance a company’s liquidity in China’s currency.

China represents by far the largest pool of transaction banking revenue in the Asia-Pacific region, and as liberalization of the financial system accelerates, this pool is expected to grow, intensifying competition among banks for business.

Indeed, Standard Chartered estimates that the transaction banking revenue pool across Asia-Pacific totalled about $285 billion in 2011 – with China generating about $215 billion of that. Asia-Pacific revenues are expected to continue to grow between 13% to 14% a year to $535 billion by 2020, says Boston Consulting Group. 


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