Cash & Liquidity ManagementCash ManagementCash Management RegionalArup Completes First China-UK Renminbi Sweep outside SFTZ

Arup Completes First China-UK Renminbi Sweep outside SFTZ

Global consulting engineers Arup Group, assisted by HSBC, has completed an automated, cross-border renminbi (RMB) sweep between Shanghai and London, the first automated RMB sweeping between China and the UK outside of the Shanghai Free Trade Zone (SFTZ).

HSBC said the sweep marked a significant step forward for the growth of the currency. “This latest treasury management innovation takes place against a backdrop of the growing adoption of RMB as an international currency,” the bank added

HSBC Payments and Cash Management (PCM) began working with Arup to address their liquidity management in 2010. The challenge was to enable Arup to execute a broad range of short-term investment opportunities, reduce their overall group-debt and significantly enhance the management of their global working capital. A global multi-currency cash pool was designed to be the cornerstone of Arup’s internal liquidity management structure, increasing liquidity whilst providing additional yield.

Arup’s first Shanghai to London sweep took place on December 8. Kee Joo Wong, HSBC head of payments and cash management, China said: “Thanks to various liberalisation steps taken by the Chinese authorities, Arup is now able to incorporate the group’s Chinese liquidity into their global pool. This automated cross-border sweep represents China’s increasingly seamless integration with the global economy.”

The automated end-of-day sweep between China and the UK is the latest phase in the extension of Arup’s multi-currency cash pool that already captures excess liquidity from entities in the UK, the US, Singapore, Australia and Hong Kong. Arup Group treasury also has real time visibility and control of their liquidity position in 19 countries and regions.

“The new sweep enables us to manage our cash more efficiently by connecting our global and China cash management structures and significantly improves our liquidity supporting business growth in China,” said Richard Abigail, group treasurer, Arup Group.

“Any cash in China exceeding ¥40m is automatically pooled into Arup Group’s treasury fund in the UK for extra yield. If the RMB balance in China falls below ¥40m, funds will be automatically swept back from London. The level of the domestic pool account required will be reviewed annually to ensure that is supporting the businesses needs on a day-to-day basis.”

The principal benefit of the global multi-currency cash pool has been the removal of unnecessary external borrowing costs. Even in the current low interest rate environment, the improved return on net Arup’s surplus cash is estimated at around £1m annually.

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