The joint DC advising service, known as ChinaExpress, will offer customers access to BoCommÆs 2,700 offices in 137 cities across China. More importantly for the banks, it gives the partners a key advantage over other trade banks in the country, eliminating the need for multiple correspondent bank processing fees.
The partnership is the most recent engagement between the two firms, which has grown deeper since HSBC acquired 19.9% stake in in BoComm in 2004. Since the stake purchase by HSBC, the two banks have partnered on business lines such as co-branded dual currency credit cards and wholesale banking. Most recently, they have formed a distribution relationship with the Chinese bank acting as custodian and distributor for the HSBC Jintrust joint ventureÆs inaugural mutual fund.
According to HSBC, this latest service with BoComm has been forged in response to the surge in ChinaÆs international trade volumes. In 2005, export volumes from China soared by 28.4% to $762 billion, a figure the bank believes will continue to grow in the coming years.
ôIn China, trade is obviously a very hot topic and with ChinaExpress, weÆre expecting to see our position strengthened as the leading provider of trade services in Asia-Pacific,ö says Alistair Currie, HSBCÆs head of trade services Asia-Pacific. ôLaunching this service is the latest step in our deeper engagement with BoComm and it leverages both banksÆ trade networks.ö
Over time, the partnership is expected to establish wider cross-border solutions leveraging HSBCÆs global reach and drawing further on BoCommÆs experience in RMB-denominated capabilities and extensive mainland network.
As HSBC is the first foreign bank to offer DC advisory services with a local Chinese player, the advantages are plentiful. Not only does the partnership abolish additional correspondent bank charges, wherein an additional fee had previously been figured into the clientÆs trade cost, but it also gives both the banks a unique platform where turnaround times are slashed, and service standards and greater levels of transparency are established.
Leveraging on the respective experience and strengths of both banks will evidently reduce some of the risk elements of China trade. HSBC will also provide expert trade advisory through a dedicated team of over 200 on the ground professionals in mainland China and continue to offer DC advising services in China to its own clients within its existing network catchment area.
ôLast year, we worked carefully with BoComm to establish where we could add value to each otherÆs business,ö says Currie. ôThey can now leverage our global network for their clients and in turn, we can give our global client base a smoother DC advising process in China.ö
