Deutsche Bank completes its first cross-border renminbi netting transaction for Bosch

News | 21 September 2016

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Deutsche Bank has executed its first cross-border Renminbi netting transaction for Bosch under People's Bank of China (PBOC)’s centralised cross-border renminbi management by multinational companies’(MNC) scheme.

The deal was announced on 21 September 2016 in Hong Kong.

Headquartered in Germany with revenues of more than €70bn, Bosch is a leading global supplier of technology and services. The company’s operations consist of four business sectors – mobility solutions, industrial technology, consumer goods, as well as energy and building technology. It set itself the goal of becoming one of the leading global companies capitalising on the internet of things (IoT), with its 2015 annual report (entitled Simply Connected) demonstrating this commitment.

The Bosch Group has a global netting centre in Germany for cross-border settlement transactions among intra-group companies. Deutsche Bank has implemented a customised process to consolidate the RMB cross-border transactions of Bosch’s China entities and settle with Bosch’s global netting centre on a pre-defined netting schedule.

Christian Zeidler, head of corporate finance and regional treasury for APAC at Bosch, said,“This renminbi netting solution will significantly benefit our global treasury operations with improved transaction costs due to the reduced number of payments, better global liquidity management across the group, and minimised onshore FX exposure by centralising FX management in HQ Germany. Our China subsidiaries are now another step closer to full integration in our global treasury operations.”

Mahesh Kini (pictured), managing director, head of trade finance and cash management corporates – China at Deutsche Bank, said: “We are pleased to have implemented this solution for the Bosch Group. Through the first netting transaction executed, Deutsche Bank was able to consolidate approximately 2000 cross-border payments into a single transaction, and save considerable costs and efforts to Bosch entities in China. This solution demonstrates our ability to offer a full suite of RMB cross-border solutions and is also another milestone in our efforts to bring innovative solutions to our key global clients operating in China.”

About the PBOC MNC scheme

 Cross-border cash RMB cash pooling was made possible for MNCs in China when in early 2014 China launched a pilot programme to enable this in the Shanghai Pilot Free Trade Zone (SH PFTZ). Domestic and foreign-invested based MNCs joined the pilot programme and this provided them with more channels to recoup RMB back into mainland China while at the same time greater efficiency in managing treasury and cash globally. In June 2014, the PBOC proposed expanding the cross-border RMB cash pooling operations nationwide to enhance the centralised RMB cash management of MNCs.

As explained by PWC in a China tax and business advisory news bulletin (February 2015), the Chinese central bank issued the Notice Regarding Centralised Cross-border RMB Operation by MNCs (Circular 324) as guidance on cross-border RM bashing pooling by MNCs nationwide.

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