Financial bodies sign Lingang agreements
Sixteen financial institutions, including the Big Four and Shanghai Stock Exchange, signed agreements with the Lingang authority on Friday to establish branches in the new area of the Shanghai free trade zone.
The Shanghai headquarters of the People’s Bank of China, China’s central bank, said at the signing ceremony “it would actively support the construction of the new area, the implementation of central government’s policies and measures to expand financial openness, particularly their initiation in Lingang.”
At the same time, a number of incentives were issued to support the development of Lingang’s financial sector. The new policies will help financial institutions provide cross-border services for enterprises and non-residents in the new area, such as cross-border bond issuance, cross-border investment, mergers and acquisitions, and centralized operation of cross-border funds, on the premise of compliance with the law and controllable risks and international prevailing rules.
Enterprises and institutions in the new area are being encouraged to launch offshore transfer business, carrying out shipping financing and settlement, shipping index derivatives and “green finance.”
In addition, a test run of the integration of domestic and foreign currencies in free trade will be based in Lingang. The funds raised from abroad by enterprises in the new area, those raised by qualified financial institutions from abroad and income obtained from providing cross-border services can be used independently for the operation and investment activities in the new area or overseas.
It also supports the facilitation of foreign exchange receipt and payment among Lingang enterprises and promotes the construction of a fund management center. “The threshold for the centralized operation of cross-border funds will be lowered appropriately to further facilitate the two-way collection of cross-border funds by enterprises in the new area, to achieve the centralized management of funds.
At the signing ceremony, Wang Bei, vice president of Agricultural Bank of China’s Shanghai branch, disclosed the fulfillment of a 1-billion-yuan (US$141 million) debt-to-equity swap project to support Lingang Group next week.
She said the bank will give full play to the comprehensive operational advantages of the bank and fully utilize in-statement loans, bond underwriting, asset securitization and other debt financing products to meet the needs of enterprises.
Zhao Rong, president of the Bank of China’s Shanghai branch, said “the Bank of China has quickly completed the establishment of the new branch, taking the lead in the first batch of business, such as account opening, yuan deposit and loan, trade facilitation settlement and cross-border two-way yuan fund pool.”
On Friday, the Shanghai branch provided a total of 8 million yuan in credit and related exclusive comprehensive financial services to three small and micro enterprises in the new area. Additionally, it supported an affordable housing project in Lingang with 2 billion yuan.
In line with the agreements signed with Lingang, Bank of Communications and Shanghai Pudong Development Bank will provide the Lingang Special Area Administrative Committee, key enterprises and construction projects in Lingang intentional credit lines equivalent to 100 billion yuan respectively.
At present, China Merchants Bank has signed a comprehensive strategic cooperation agreement with Lingang Group, and has given it a comprehensive credit line of 50 billion yuan.
Industrial Securities intends to set up a subsidiary to provide sustained research, program design and advice on the reform policies in fields of offshore finance, cross-border fund settlement, yuan internationalization and capital market internationalization in terms of the role that Lingang will play.
“We will establish a number of platforms, such as a branch in the Shanghai free trade zone and the institute of economics and finance, and led by the cross-border financial business and innovative business to explore the way for further opening up in the field of securities in China,” said Kong Xiangjie, vice president of Industrial Securities.
Gan Yuli, deputy general manager of China Pacific Property Insurance’s Shanghai branch, said her company will focus on three aspects: insurance products and services, data information sharing and service introduction, and the establishment of institutions and platforms.
Pacific Insurance has provided risk management services for enterprises in developing maritime economy in the new area. In the near future, China Pacific Property Insurance Shanghai Branch will provide Tesla property insurance to cover its plant in Lingang.
