Deutsche Bank has signed a co-operation agreement for cash management services in China with the Bank of Communication.
The German bank says that the main reason for the agreement is to complement their branch presence in China, and to provide value-added services such as accounts query and payment initiation from the one platform.
"Our customers are foreign multinationals that want to be able to receive information and initiate payments electronically. We will provide an electronic platform so that MNCs can open an account with a Bank of Communication branch and access that account to make transactions via our electronic platform," says Shirley Chan, head of cash management, China and Hong Kong.
Foreign banks are prohibited from handling renminbi, except in two provinces Shanghai and Shenzhen. Therefore, most foreign corporations and multinational companies use local bank services with their renminbi requirements. The agreement between Deutsche Bank and the Chinese bank was born out of a need to service those companies that work with both banks.
Deutsche anticipates that future reciprocal business arrangements will result from this agreement. "Although nothing is finalized yet, we look towards trade finance related agreements, and access to local companies that are planning to expand overseas," says Chan.
Just the latest
This latest agreement follows a string of tie-ups between foreign banks keen to expand their presence on the mainland but restricted by regulations.
Earlier this month, Standard Chartered and the Industrial and Commercial Bank of China (ICBC) signed an agreement to co-operate in international trade and cash settlement in the emerging markets of Latin America, Asia Pacific, Middle East, South Asia and Africa. Within China, ICBC will handle Standard Chartered's renminbi settlement and trade, and co-ordinate on treasury and staff training.
The business relationship between Standard Chartered and ICBC dates back to 1987, covering foreign exchange business and inter-bank funding. Co-operation extended to the renminbi business recently when the two banks signed a three billion yuan loan facility and a renminbi settlement agreement.
ICBC also handles HSBC's yuan remittance. HSBC has a similar agreement with the Bank of China for the purpose for enabling its customers to use the Chinese bank's remittance and clearing systems.
