BAML has open a China cash pool based on the Shanghai FT zone

BAML has opened a China cash pool based on the Shanghai FT zone

Bank of America Merrill Lynch has launched an automated US dollar cross-border cash pooling services for corporations operating in the Shanghai Free Trade Zone. ZF TRW, a division of ZF Friedrichshafen, manufacturers of automobile safety systems, has implemented the working capital solution and is serving as the pilot client.

The BAML service was created to take advantage of the cross-border pooling scheme policy liberalisation announced by China’s State Administration of Foreign Exchange, which allowed wider cross-border use of funds sourced both on and offshore, and an increased quota for net inflows.

US dollar cross-border cash pooling can assist companies operating in China by better addressing working capital requirements with on and offshore surplus funds. The BAML service allows for US dollar payments and collections centralisation, and netting arrangements. It also allows corporate entities in China to operate more in line with their global enterprise cash management practices by reducing cross-border payment fees, building efficiencies in cross-border settlement, and standardising processing flows.

“China continues to deregulate its treasury management framework,” said Ivo Distelbrink, head of GTS, Asia Pacific at BofA Merrill. “This solution provides opportunities for those operating there to adopt more efficient and effective treasury management practices.”

The US dollar cross-border cash pooling solution is supported by BAML’s Global Liquidity Platform, which allows corporates in China to access automated balance-sweeping capabilities, supports lending and borrowing quotas, and enables regulatory reporting across multiple jurisdictions.

“The launch of US dollar cross-border cash pooling is a key milestone for ZF TRW in integrating our China cash management function into our global structure, greatly helping us optimize working capital management, control FX exposures and improve funding efficiency,” said Jane Hua, Asia Pacific treasurer for ZF TRW. “Bank of America Merrill Lynch provided the advice, the solutions and the expertise to give us the confidence to take advantage of an evolving treasury management market in China.”

Over recent years, BAML has shown increased interest in China. In 2014, the company launched US dollar and RMB cross-border cash pooling facilities to help companies integrate the cash generated onshore into their global liquidity structures. The paperless cross-border payment solution was intended to help clients improve payment efficiency and centralise payments.