Managing the cash sloshing around globe

Updated 2017-12-20 12:40:10 Shanghai Daily

In a world where corporations are expanding their footprint across the globe, cash is not only king, it is also on the move.

In fact, billions of dollars change hands every day, creating a vast system where players need cash management in order to operate efficiently and profitably. In China, those services are expanding because of deregulation and the technology of the digital age.

That management is often called transaction banking. Simply put, it's the process of transferring money and includes commercial banking products, domestic and cross-border payments, professional risk mitigation for international trade, and the provision of trust, agency, depository, custody and related services.

About 20 years ago, Citibank first introduced rudimentary cash management services into China.

"Before that, Chinese banks were pretty much just providing some very simple clearing and settlement services," said Pei Yigen, Citi China's country head of treasury and trade solutions.

He said that globalization is a major driver in what is now a booming sector and the trend is expected to continue through 2018.

Transaction banking began coming into its own after the 2008 global crisis as more banks repositioned themselves in a daunting market environment, according to the recent annual report by China Transaction Banking 50 Forum.

"When you look back on the crisis, strong transaction banking business really helped us through the crisis," said Mahesh Kini, managing director and head of global transaction banking in China for Deutsche Bank. "Every client who has working capital running needs cash management. Everyone. It brings a lot of stability to our balance sheet."

Indeed, transaction banking is one of the major top line and bottom line business contributors for Deutsche Bank China, according to Kini.

Hang Seng Bank (China) Ltd said it registered 70 percent growth in cash management during the first half of 2017.

Gu Wei, head of treasury services for China at JPMorgan Chase, likens cash management to a marriage. Once clients become wedded to our services, she told Shanghai Daily in a joking way, divorce becomes unlikely.

Visibility of cash positions, concentration and profit are the three goals of chief financial officers and corporate treasurers, according to Kong Lingji, a partner of consulting at PricewaterhouseCoopers Management Consulting (Shanghai) Ltd.

As such, banks are constantly striving to meet those demands, he added.

Talking of the recent trends, Deutsche Bank's Kini cited the Nets Union Clearing Corporation, a new online clearinghouse platform backed by the People's Bank of China.

"It will be fully running next year," he said. "Our clients will want us to receive money through the clearinghouse for goods they are selling on Taobao or That is a huge change that we are discussing with clients now. It's really about putting your technology capabilities to leverage the infrastructure changes and, at the same time, give clients better service."

With deregulation, cross-border money flows are holding steady.

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