RegionsChinaDeutsche Bank completes first transaction with new SAFE rules

Deutsche Bank completes first transaction with new SAFE rules

Deutsche Bank completes its first RMB foreign debt centralized management transaction under the upgraded SAFE scheme released in March

Deutsche Bank has completed its first centralized management transaction of yuan foreign debt under China’s new rules for cross-border fund management.

The State Administration of Foreign Exchange (SAFE) released new rules on centralized cross-border fund management for multinational companies in March, increasing the foreign debt quota of multinationals’ domestic arms and allowing the yuan to be the currency of domestic master accounts.

The transaction took place on behalf of Delphi Technologies, headquartered in London, which has been actively participating in cross-border cash pooling schemes to support its China operations.

Carol Dong, Asia Treasury Manager at Delphi Technologies, said: “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. We were impressed by Deutsche Bank’s policy expertise, and dedication to implementing the solution. With the new foreign debt centralized management scheme, we will be able to make better use of our overseas funds and expand our business in China.”

Managing FX risks centrally

For the purpose of further enhancing the business environment in mainland China and facilitating cross-border fund movement, SAFE announced in March 2019 new Administrative Provisions on Centralized Cross-border Fund Management for Multinational Companies (Circular 7), which includes additional amendments to the scheme. The upgraded scheme now increases the foreign debt quota of multinational companies’ 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 CAPEX and working capital needs.  With this account, the company will be able to maximize the use of its overseas cash liquidity, while managing FX risks centrally.

Dirk Lubig, Head of Global Transaction Banking China, and Greater China Head of Corporate Cash Management at Deutsche Bank, said: “We are proud to be Delphi Technologies’ designated financial partner for this project. Our timely response to the new regulation resulted in a short time-to-market implementation. It is another solid testimony to our market-leading strength in cross-border cash management solutions. Our deep understanding of the China market and strong global network enable us to offer clients efficient value-added financial solutions to support their business needs in China and beyond.”

Last week, Kevin Burke rejoined Deutsche Bank to head ITC team in Asia Pacific and strengthen multiple interfaces between bank and its global clients.

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