StanChart and Shell China gets a go-ahead for a cross-border sweeping structure

Shell China can now use surplus cash for business needs.

In a release, Standard Chartered Bank (China) and Shell (China) announced that they have been granted approval to set up a Foreign Currency Cross-border Sweeping structure. The structure, approved by the Chinese government following their pilot scheme to centralise foreign currency management for multinational companies (MNCs), allows Shell China to use surplus cash for business needs; thereby reducing trapped cash, a common problem faced by MNCs and enabling greater working capital efficiency.

By utilising this structure, Shell China will be able to significantly enhance its liquidity through the automatic sweeping of its onshore and offshore excess foreign currency (within an approved foreign debt quota and overseas lending quota). The structure will not only simplify the process of quota registration, drawdown and repayment, it will also reduce the cost of funds and enable greater working capital efficiency.

Sridhar Kanthadai, Regional Head, Transaction Banking, North East Asia, Standard Chartered Bank, said, “This is a milestone for MNCs operating in and with China. The ability to effectively manage excess foreign currency liquidity globally is paramount to optimising cash management for MNCs. This will encourage them to increase their trade and investment in China as it gradually opens up to the rest of the world.”

Standard Chartered China is amongst the first batch of foreign banks to implement “the foreign currency centralized operation pilot programme for multi-national company (“MNC”)”. Sridhar added, “this scheme is a significant step that reiterates the commitment and intent by China to support global companies in helping them integrate their financial practices. It also signifies how China is establishing its position as an international financial centre.”