BoA Jumps On China’s Looser Treasury Management Rules

Bank of America Merrill Lynch is looking to take advantage of more lenient regulations in China regarding corporate treasury management. The FI announced Wednesday (Jan. 6) that it has created a new cash pooling program for companies operating in China in a move to help multinational corporations more adequately manage their cash flow.

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BoA’s Global Transaction Services (GTS) introduced an automated cross-border cash pooling service, in U.S. dollars, for businesses that operate in the Shanghai Free Trade Zone. The tool is being introduced following China’s State Administration of Foreign Exchange making a recent decision to relax restrictions on cash pooling and using funds sourced across borders.

“China continues to deregulate its treasury management framework,” said GTS Head of Asia-Pacific Ivo Distelbrink in a statement. “This solution provides opportunities for those operating there to adopt more efficient and effective treasury management practices.”

Bank of America added that the solution means corporations can make payments and pool cash in U.S. dollars when operating in China, reduce cross-border payment costs, make cross-border settlement more efficient and streamline transaction processes.

The bank added that it will be supported by its Global Liquidity Platform, which automates balance sweeping, lending and borrowing quotas and aids in regulatory reporting across jurisdictions.

ZF TRW, an automobile safety system manufacturer, will reportedly be the first pilot client of the cross-border cash pooling service. In a statement, the company’s Asia-Pacific treasurer, Jane Hua, said the tool will help “optimize working capital management, control FX exposures and improve funding efficiency.”

Bank of America Merrill Lynch first launched cross-border cash pooling services in both the U.S. dollar and China’s RMB less than two years ago, the company added.