Citi announced the launch of its first Renminbi Cross-Border Auto Sweeping structure from China to London. The move will also provide clients with options to choose from, as Citi is offering live automated RMB cross-border sweeping in China, Hong Kong, Singapore and London.
The new product is designed to help companies with gaining easy access to a global liquidity structure, integrating the funding structures overseas and domestically. It will cater to both foreign companies operating in China and to domestic firms with overseas operations, using the Shanghai Free Trade Zone’s (FTZ) legal framework.
The company is using its global concentration engine to provide clients with the ability to sweep true end-of-day balances into London without the process resulting in any value lost. The platform comes with tracking and reconciliation of inter-company loan positions, automated mechanisms to control lending positions, as well as reporting to meet local regulatory and reporting requirements.
The solution has already been implemented for Swiss company Pentair, enabling it to pool its daily working capital from CNY balances into its global cash reserve.
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The company’s Senior Treasury Director, Terri Scherber said, “Pentair was keen to take advantage of the newly deregulated SFTZ policies and connect our domestic RMB funding structures to our global liquidity pool. Citi’s automated sweeping solution now provides us a much more efficient way of managing this process.”
The possibility brings a whole set of new opportunities for global companies on the Chinese market and greatly facilitates business conduct.
Citi’s Asia-Pacific Head of Liquidity Management, Sandip Patil, shared in the company announcement, “With our local depth and global concentration platform, Citi enables our clients to integrate RMB effectively into their treasury and liquidity structures, irrespective of location, truly paving the way for the RMB’s development as an international currency. Our success in replicating our G10 expertise and capabilities into the RMB space is playing a critical role for our clients.”
The incorporation of RMB into London-based cash pools will be of significant benefit to both Chinese and multinational companies in the SFTZ, allowing them to capitalise on interest increases, effectively offset overdrafts in low-yield, hard currencies, as well as achieve greater visibility and improved risk management,” shared Amit Agarwal, EMEA Head of Liquidity Management Services at Citi.
The Shanghai FTZ, has been a test bed for many progressive policies by the Chinese government and those deemed successful are set to be gradually implemented across mainland China. Despite still being mentioned in the US treasury’s currency manipulation report, the stance of the US government is toned down as China repeatedly pledged FX reforms.