Bank of America Merrill Lynch Global Transaction Services (GTS) has launched automated US dollar (USD) cross-border cash pooling services for corporations operating in the Shanghai Free Trade Zone (SFTZ).
The group said that ZF TRW, a division of Germany’s ZF Friedrichshafen, which manufactures car safety systems, has implemented the working capital solution and is serving as the pilot client for this innovative service.
BofA Merrill added that the new service allows companies to take advantage of the cross-border pooling scheme policy liberalisation announced by China’s agency The State Administration of Foreign Exchange (SAFE), which allows for the wider cross-border utilization of funds sourced both on and offshore, and an increased quota for net inflows.
USD cross-border cash pooling can assist companies operating in China by better addressing working capital requirements with on and offshore surplus funds. The banking group’s new service allows for USD payments and collections centralisation, as well as netting arrangements.
It also allows corporate entities in China to operate more in line with their global enterprise cash management practices by reducing cross-border payment fees, streamlining cross-border settlement and standardising processing flows.
“China continues to deregulate its treasury management framework,” said Ivo Distelbrink, head of GTS, Asia Pacific at BofA Merrill. “This solution provides opportunities for those operating there to adopt more efficient and effective treasury management practices.”
“The launch of USD cross-border cash pooling is a key milestone for ZF TRW in integrating our China cash management function into our global structure, greatly helping us optimise working capital management, control FX exposures and improve funding efficiency,” said Jane Hua, Asia Pacific treasurer for ZF TRW.
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