13/04/17

Singapore, Shanghai deepen ties amid fresh commitments by banks

Singapore

FINANCIAL institutions from both Singapore and Shanghai signed several agreements on Wednesday amid efforts to enhance capital markets, boost ties between banks and corporates, and raise collaborations with financial technology (fintech) firms, reports The Business Times. 

Singapore has also attracted Shanghai Pudong Development Bank (SPD Bank) to establish its first overseas branch in Singapore, which was officially launched on Wednesday.

The memoranda of understanding (MOUs) were inked as part of the third Singapore-Shanghai Financial Forum held in Singapore.

Delivering the opening address, Jacqueline Loh, deputy managing director of Monetary Authority of Singapore, said China's future direction in financial sector is deepening and liberalisation is clear, pointing to the announcement by President Xi Jinping at the G20 Summit last year that China would continue with efforts to make the yuan an international currency, and further internationalise China's financial sector.

"Amid the current focus on developing China's onshore capital markets to support capital market liberalisation and renminbi internationalisation, Singapore and Shanghai financial institutions can work together in developing appropriate risk management and hedging tools."

This also comes as the One Belt, One Road initiative will remain a key transnational programme for China.

"As a hub for trade and investment flows in South-east Asia, Singapore would be a natural partner to Shanghai in realising this vision to promote trade and investment flows between China and the Asean region," said Ms Loh.

She noted that Singapore and Shanghai can collaborate to encourage Chinese corporates to access direct funding for their One Belt, One Road projects. Last November, MAS introduced the Asian bond grant scheme for first-time Asian bond issuers. The scheme offsets up to 50 per cent of issuance costs.

Singapore and Shanghai can also work together to "harness technology together in a purposeful way, while ensuring appropriate and responsive regulatory frameworks to safeguard against possible new risks", she said.

UOB (China) signed two MOUs - one with Shanghai-based infrastructure construction company SUCG International Engineering (SUCGI), a unit of Shanghai Tunnel Engineering, and another with Nufin Data, a Singapore-based fintech firm wholly owned by JK Tech Group.

The bank will support the expansion in Singapore and other South-east Asian countries by SUCGI. Its parent Shanghai Tunnel Engineering has built underground tunnels for Singapore's MRT system since 1996.

UOB (China) said it will also connect SUCGI to government agencies, trade and industry associations, and professional service providers within Asean through the bank's foreign direct investment advisory unit's network of strategic partners.

"As Chinese companies seize opportunities in South-east Asia, they seek a partner with a strong regional network and solRid understanding of the local environment," said Peter Foo, president and CEO of UOB (China) in a media statement.

"The depth and breadth of UOB's South-east Asian franchise enables us to offer unique local insight and expertise that will help SUCGI to pinpoint infrastructure development opportunities in the region."

Under the second MOU, UOB (China) will work to take Singapore's Nufin Data into the China market. The bank has an existing collaboration with Nufin's parent to improve the application process for supply chain financing. UOB hopes to help Nufin Data introduce the fintech's cloud-based supply chain financing service to the bank's medium- and large-sized corporate clients.

Its Singapore peer, OCBC, also signed two partnership agreements - one with Bank of Shanghai, and the second with SIIC Shanghai International Trade Group, to deepen relationships. Speaking at the forum, OCBC's chief executive officer Samuel Tsien noted that Singapore and Shanghai can benefit from collaboration amid geopolitical changes.

"Even if there are realignments in the new global order, Shanghai and Singapore will continue to play their respective leading roles in Asia's financial and economic landscape," said Mr Tsien. "With the world becoming increasingly connected, all key financial centres in Asia, including Shanghai and Singapore, would need to collaborate and work with each other for the efficient realisation of the region's potential and for the effective management of risks."

On the back of its official opening, SPD Bank - ranked seventh among Chinese banks based on Tier-1 capital - signed agreements with four corporate clients: Mapletree Investments, CSSC Energy, Shanghai Tunnel Engineering and CNQC (South Pacific) Holding.

The branch's operations here are targeting Chinese companies expanding into this region, said the bank, which has a total asset base of 5.86 trillion yuan (S$1.19 trillion). It will also provide financial services to companies seeking to enter the Chinese market, acting as a bridge connecting Singaporean and Chinese corporations.

Liu Xinyi, vice-chairman and president of SPD Bank, said: "Singapore is an important international financial centre and plays a pivotal role in the Asia Pacific region and the global financial sector. The bank plans to make Singapore branch our key regional hub, acting as a conduit between our clients and South-east Asia, and at the same time using the establishment of the Singapore branch as the new launch-pad of our internationalisation strategy."

It also signed an agreement with Singapore Exchange (SGX). SPD Bank is set to recommend Chinese enterprises to raise funds through initial public offerings and issuance of offshore RMB bonds through SGX.

Chew Sutat, head of equities and fixed income at SGX, said not only will the partnership raise Singapore's profile as an offshore centre and international exchange, but it will also support Chinese companies' capital-raising needs as they seek international opportunities and profiling.