A German client of the HSBC German branch mandated the financial institution to implement a fully-automated two-way renminbi sweeping solution between China and Germany. One of the leading worldwide wholesalers of fasteners, screws and screw accessories, the Würth Group, asked for a solution to enable the company to sweep funds between China and Germany.
The implementation of the solution will mark the first one for a German firm, with sweeping greatly facilitating the use of cash balances for the Würth Group. Globally operating companies are using sweeping in order to manage their disposable funds easily. With the solution from HSBC, the company will be able to move cash across borders physically, from China to Germany and vice versa.
The process is fully automated as the global payments recognition for the Chinese yuan continues growing steadily. The head of treasury management of Würth Finance International B.V., Patrik Imholz, said, “Renminbi sweeping enables us to manage the liquidity of our Chinese group companies centrally from Germany and to integrate it into our global cash management.”
“Surplus liquidity can be used to finance other group units, so insufficient liquidity can be balanced out by cross-border transfers, while interest and foreign currency expenses can decline as a result. Currency risks can also be managed centrally from Germany,” Mr Imholz added.
HSBC’s head of payments and cash management in Germany, Gabriele Schnell, commented in the announcement, “The more payments are settled in renminbi, the more valuable automated renminbi cash concentration becomes for German companies.”
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Two-way cross-border sweeping has been made possible for the renminbi throughout China since July 2014. Commenting about the process, Mrs Schnell said, “Automation means greater efficiency and security for our customers, helping them to use the cash in their business globally in the most valuable way possible.”
Irrespective of a company’s location, turnover and length of business activity in Europe, renminbi sweeping is subject to approval. Ceilings for capital inflows and outflows, which may not be exceeded, also have to be agreed on between the bank and the companies.
After Hong Kong, Singapore and Great Britain, Germany is the fourth country in which HSBC has implemented the fully-automated two-way cross-border renminbi cash concentration.
The accounts of Würth Group are settled beyond the Chinese national border; At the end of a working day, all of the accounts of the firm’s various national companies in China are settled via the master account of the group’s Chinese cash pool. The master account in turn is settled with a German target account via a special cash concentration account.
The resulting efficiency greatly facilitates the business of the German company in China and globally.