Deutsche Bank has completed its first renminbi (RMB) foreign debt centralized management transaction under China’s State Administration of Foreign Exchange (SAFE)’s upgraded rules on centralised cross-border fund management, for Delphi Technologies.
The London, UK-based company, which was spun off from Delphi Automotive at the end of 2017, is one of the world’s leading providers of vehicle propulsion systems and has been actively participating in cross-border cash pooling schemes to support its China operations.
In March this year SAFE – the administrative agency that regulates China’s foreign exchange market activities and manages the state FX reserves – announced new administrative provisions on centralised cross-border fund management for multinational companies (MNCs), aka Circular 7.
SAFE amended the scheme with the aim of further enhancing the business environment in mainland China and facilitating cross-border fund movement. The upgraded scheme now increases the foreign debt quota of MNCs’ domestic participating members and allows for RMB to be the account currency for domestic master accounts.
Under the new scheme, Deutsche Bank was able to set up an RMB domestic master account for Delphi Technologies to aggregate the foreign debt quotas of the company’s onshore entities in China, and support its capital expenditure (capex) and working capital needs. With this account, the company will be able to maximise the use of its overseas cash liquidity, while managing FX risks centrally.
“The recent changes in the SAFE scheme including quota expansion, currency and account management flexibilities will help multinationals like us to strengthen their China businesses,” said Carol Dong, Asia treasury manager at Delphi Technologies.
“We were impressed by Deutsche Bank’s policy expertise, and dedication to implementing the solution. With the new foreign debt centralised management scheme, we will be able to make better use of our overseas funds and expand our business in China.”
Dirk Lubig, head of global transaction banking China, and Greater China head of corporate cash management at Deutsche Bank, added that the bank's "timely response" to the new regulation resulted in a short time-to-market implementation.
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