BOC sets up 1st overseas forfaiting, commodities finance units
Updated: 2011-09-22 17:50
(Xinhua)
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SINGAPORE - Bank of China (BOC), one of the largest commercial lenders in China, officially set up its first forfaiting unit and commodities finance unit outside China in Singapore on Sept 22.
The bid to boost the bank's trade finance services in the Asia Pacific makes it the first Chinese bank to set up a regional forfaiting unit and a commodities finance unit outside China.
Forfaiting, in trade finance, typically involves the purchasing of receivables from exporters where the forfaiter takes on all risks involved with the receivables. The exporter gets benefits such as the elimination of political, transfer, and commercial risks and improved cash flows, whereas the forfaiter gets the extra margin on the loan to the exporter.
Yue Yi, executive vice president of the bank, said it established the two units to cater to the needs of companies benefiting from the booming commodity trade and trade finance secondary market in Singapore.
"Singapore is located in the heart of the Asia-Pacific region and has played a strategically important role in the commodity trade, so it was a natural choice to start our first overseas forfaiting and commodity finance units here," he said.
Yue said the two centers will add significant breadth and depth to the existing businesses of the bank.
Trade finance, including the yuan trade finance, has been growing with the Chinese banks in Singapore on back of growing intra-Asia trade. Several Chinese banks now have presence in Singapore and the Industrial and Commercial Bank of China (ICBC).
The BOC, which has been operating in Singapore since 1936, has a Full Bank license now with seven branches. It has been seeking a Qualifying Full Bank license, which allows a foreign bank to open up to 25 branches and off-site automatic teller machines (ATMs).
The Bank of China also signed an agreement on cooperation in commodities finance with Unipec, a wholly-owned unit of Chinese oil giant Sinopec at the ceremony officiated by Chinese Ambassador to Singapore Wei Wei and International Enterprise Singapore Assistant Chief Executive Officer Kathy Lai on Sept 22.
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