SINGAPORE - Bank of China (BOC), one of the largest commercial lenders in China, officiallyset up its first forfaiting unit and commodities finance unit outside China in Singapore on Sept22.
The bid to boost the bank's trade finance services in the Asia Pacific makes it the first Chinesebank 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 exporterswhere the forfaiter takes on all risks involved with the receivables. The exporter gets benefitssuch 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 theneeds of companies benefiting from the booming commodity trade and trade finance secondarymarket in Singapore.
"Singapore is located in the heart of the Asia-Pacific region and has played a strategicallyimportant role in the commodity trade, so it was a natural choice to start our first overseasforfaiting and commodity finance units here," he said.
Yue said the two centers will add significant breadth and depth to the existing businesses of thebank.
Trade finance, including the yuan trade finance, has been growing with the Chinese banks inSingapore on back of growing intra-Asia trade. Several Chinese banks now have presence inSingapore 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 withseven branches. It has been seeking a Qualifying Full Bank license, which allows a foreignbank 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 withUnipec, a wholly-owned unit of Chinese oil giant Sinopec at the ceremony officiated by ChineseAmbassador to Singapore Wei Wei and International Enterprise Singapore Assistant ChiefExecutive Officer Kathy Lai on Sept 22.
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