Bank of Communications strives to move forward and deeply cultivates the "experimental field"

This year marks the tenth anniversary of the establishment of the Shanghai Pilot Free Trade Zone, as well as the tenth year for Shanghai to deepen high-level opening up and comprehensively deepen financial reform. The Shanghai Branch of Bank of Communications has a high understanding and grasp of its responsibilities and missions from the perspective of serving the "great of the country". Based on the financial innovation policy of the free trade zone, it focuses on implementing high-level opening-up to the outside world, fully utilizing both domestic and international markets and resources, comparing with high standard international economic and trade rules, benchmarking institutional innovation with financial innovation, and taking the lead in serving the real economy. It has achieved a series of gratifying results, with multiple business growth rates ranking at the forefront of the market, and has made contributions to promoting the high-quality development of the free trade pilot zone.

Financial innovation serves institutional innovation

Reform and opening up are like a surging tide. In September 2013, the Central Committee of the Communist Party of China and the State Council supported the establishment of Shanghai's first national free trade pilot zone on the coast of the East China Sea. In the past decade, the free trade finance business has developed rapidly, achieving fruitful results in promoting trade and financing facilitation, promoting interest rate marketization, expanding cross-border use of the RMB, deepening foreign exchange management reform, and accelerating financial opening up to the outside world.

As the only state-owned large financial institution headquartered in Shanghai, Bank of Communications attaches great importance to the major decision and deployment of the central government to establish a free trade zone, actively serving the construction of the free trade zone. In 2013, it established the Shanghai Pilot Free Trade Zone Branch, and in 2019, it established the Shanghai Pilot Free Trade Zone New Area Branch. It continues to serve the national strategy through internal institutional innovation, expanding the Shanghai Pilot Free Trade Zone business from regional business to overall group business, and continuously exploring in various aspects such as innovative business management models, cross-border cross industry service to customers, and business innovation and international integration, allowing the free trade zone business to play a comprehensive functional platform role.

In March 2020, the Shanghai headquarters of the People's Bank of China announced the launch of a pilot project for cross-border transfer of trade financing assets within the Lingang New Area of the China Free Trade Zone. As soon as the new policy is released, the first order will land quickly! The Shanghai Pilot Free Trade Zone New Area Branch of Bank of Communications has transferred two domestic Zifu Feiting assets totaling RMB 10 million from the new area enterprise Shanghai Changqiang Heavy Industry Machinery Co., Ltd. to the Bank of China Tokyo Branch and the Bank of Communications Macau Branch, respectively, becoming the first cross-border transfer of domestic trade financing assets in the Hong Kong New Area after the release of the new policy.

In order to transform highly specialized and cross departmental complex businesses into convenient and easy-to-use financial tools for enterprises, the Shanghai Branch of the Bank of Communications, together with relevant departments such as the International Department of the Head Office, has launched the "Cross border Finance One Thing" mechanism and established a cross-border finance special team, striving to bring customers a better experience with an integrated model and one thing thinking. Faced with the new requirements of financial reform and opening up, Bank of Communications has granted the cross-border finance special team the authorization to "take the lead and try". On the premise of not breaking through laws, regulations and regulatory policies, the Shanghai branch can formulate relevant business rules and regulations or management methods on its own. The cross-border finance special team leverages the characteristics of "main construction by the head office and main battle by branches" to achieve efficient cross line linkage.

Under the "One Thing in Cross border Finance" model, overseas institutional clients can open up to 5 types of overseas institutional accounts through a single application form, minimizing their "bottom line costs" and further facilitating overseas clients to open accounts in domestic banks. At the same time, Bank of Communications is taking the lead in exploring the integrated management of five types of overseas institutional accounts nationwide, and building a comprehensive overseas institutional customer service system. By fully leveraging the advantages of the "Five in One" overseas institutional account system, Bank of Communications is able to cater to the different financial needs of customers, provide diverse and complementary solutions, and carry out customer risk management in a hierarchical and classified manner based on the characteristics of large, medium, and small customers.

Bank of Communications also relies on the platform of the Free Trade Zone to leverage the advantages of "internal linkage" and "domestic and international linkage", actively serving "going out" and "introducing" enterprises. By utilizing the market-oriented and freely convertible nature of free trade account interest rates, we actively provide innovative FT financing portfolio solutions for enterprises to reduce their comprehensive financing costs. Relying on FT accounts to provide convenient services for offshore economic and trade enterprises, vigorously developing new types of offshore international trade. By combining the functional characteristics of foreign institutions such as free trade accounts, NRA accounts, OSA accounts, and innovative offshore RMB accounts, we will further enhance the ability to provide financial services to foreign institutions and facilitate the export of financial services. Utilizing the advantages of FTN accounts, actively carrying out domestic and international linkage financing business, simplifying cross-border guarantee processes, and improving financing and lending efficiency.

Not only that, Bank of Communications leverages the advantages of the free trade zone system to vigorously promote various cross-border fund pools, especially the construction of the Shanghai Free Trade Zone characteristic fund pool, effectively meeting the centralized operation and management needs of multinational enterprise groups. The Bank of Communications has established an innovative laboratory for free trade offshore bonds, integrated and launched a comprehensive financial service plan for offshore bonds in the "Five in One" free trade zone, and promoted the construction of an offshore financial system in Shanghai. On the one hand, it pioneered the comprehensive financial service system of Mingzhu Bond, which integrates investors, lead underwriters, trustees, China Bond Depository and Clearing Bank, and local settlement banks, and has been successfully implemented in multiple free trade bond projects. On the other hand, building the most extensive investor system for free trade bonds in the market, promoting a series of innovative practices with significant influence in the Pearl Bond system, and ranking at the forefront of the market in multiple dimensions such as underwriting, trust, and liquidation.

Intensive cultivation and meticulous cultivation in the "experimental field"

As a test field for reform and opening up, the Shanghai Pilot Free Trade Zone focuses on investment and trade liberalization and facilitation, actively promoting institutional innovation. The Shanghai Branch of Bank of Communications is seizing the opportunity of the Free Trade Zone, actively exploring innovative pilot projects in product, service, and management, focusing on promoting functional improvement, leveraging the platform's role, expanding business capabilities, effectively meeting the needs of enterprises for investment and financing convenience, centralized fund operation, cost reduction and efficiency increase, risk avoidance and appreciation, and providing strong support for the development of the real economy.

China is the world's largest trading country for goods, and a large number of import and export enterprises have corresponding financial needs. Bank of Communications Shanghai Branch strongly supports enterprises in the area to carry out international trade. In 2019, the Shanghai branch of Marelli, a foreign-funded group company, handled the receipt and payment of funds for the transfer of goods under the first interbank FT account, improving the efficiency of enterprise settlement and promoting the healthy development of goods transfer trade. During the COVID-19 pandemic in 2022, the bank overcame various difficulties and provided large-scale letter of credit credit and letter of credit services to registered trade leading enterprises in the region, assisting its Shanghai company in completing its first bulk commodity import trade and participating in the construction of an international oil and gas trading hub in the free trade zone and new areas through practical actions. By leveraging financial leverage, Bank of Communications helps "going global" enterprises enhance the security of their industrial and supply chains, and further integrate into the economic and trade circle of the free trade zone. In June 2023, the Shanghai branch of the Bank of Communications processed the first payment for imported liquefied natural gas settled in RMB at the Shanghai Oil and Gas Trading Center, marking a crucial step in the financial industry's support for cross-border RMB settlement in China's oil and gas trade sector.

According to data, under the current account, the Bank of Communications has implemented three high-level opening and facilitation measures in the new area, including facilitating the receipt and payment of high-quality enterprise current account funds, optimizing new international trade settlements, and exempting special refunds of goods trade from registration. As of the end of June 2023, a total of 9523 pilot businesses have been processed, with a total amount of nearly 4 billion US dollars.

In the booming field of digital trade, the exploration of Bank of Communications is also commendable. PINGPONG Group is one of the world's largest cross-border e-commerce basic service providers, providing global payment and business services to various major cross-border e-commerce service platforms worldwide. For such an internationalized business group, the Shanghai branch of the Bank of Communications has developed innovative exchange products that enable it to settle real-time FTN account funds under cross-border e-commerce through online channels and transfer them to domestic non free trade accounts. Under the premise of business compliance and controllable risks, achieve instant processing of the entire remittance process. In August 2022, the Shanghai branch of the Bank of Communications completed the first FT remittance direct service within the system without landing, allowing enterprises to achieve automated processing through whitelists, effectively improving the quality and efficiency of services for new foreign trade customer groups, and greatly improving customer satisfaction and satisfaction.

The facilitation of investment and financing is a highly concerned issue in the process of global development of enterprises. Bank of Communications Shanghai Branch focuses on enterprise bottlenecks and pain points, actively promoting innovation in investment and financing facilitation. As soon as the overall plan for the Lingang New Area was announced, Bank of Communications implemented a series of reform measures into practical operations. Shanghai Thermorod Biotechnology Co., Ltd., registered in the Lingang New Area, has subsidiaries overseas. In order to promote the subsidiaries to carry out clinical trial projects, the Bank of Communications promptly assists enterprises in handling cross-border investment fund remittances, allowing enterprises to enjoy the reform results of investment and trade liberalization and facilitation in the new area.

There are many similar cases. In 2021, it was learned that Ningbo Junsheng Electronics Co., Ltd. planned to complete a syndicated loan for an important merger and acquisition project before October of that year. Bank of Communications immediately carried out corporate due diligence and credit granting work, and ultimately participated in the syndicated project as the lead bank, successfully meeting the cross-border financing needs of the enterprise and becoming an important cooperative bank of Junsheng Electronics. With practical actions, it helped Chinese manufacturing enterprises enhance their strategic position in the global industrial chain.

In May 2023, Bank of Communications successfully launched its first international syndicated secondary buying business through an offshore account. The Cross border Syndicate Center of Bank of Communications and the New Area Branch jointly cooperated to purchase a 9.5 million euro share of an international syndicate with a foreign super institution as the borrower from a foreign bank through an offshore account. The successful implementation of this business has further enriched the operational mode of syndicated business, provided new ideas for the development of offshore business, and also provided new solutions for revitalizing existing offshore assets.

In July 2023, Bank of Communications successfully issued the first medium-term note for Shanghai Lingang Economic Development Co., Ltd., with a term of 3+2 years and a coupon rate of 2.90%. This project is not only the first hybrid science and technology innovation note with the option to convert shares in China, but also the only project in Shanghai with the lowest coupon rate among the first batch of issued notes. The raised funds are mainly used for Lingang Group and its subsidiaries to invest in equity and venture capital funds in the field of technology innovation. By setting conversion options for bonds, investors are allowed to convert their holdings of bonds into underlying fund shares during the exercise window period, in order to transfer future fund returns to investors. This opens up broad space for industry and venture capital institutions to further expand funding sources, enrich exit methods, and improve turnover efficiency. It is a benchmark innovative practice of financial support for technology-based enterprise financing.

In July 2022, Bank of Communications participated in a syndicated loan for the Hong Kong branch of the global pharmaceutical CDMO giant WuXi AppTec, effectively supplementing the company's working capital and optimizing its debt structure, becoming another successful case of Bank of Communications helping high-quality private enterprises to "bring in and go out" and promoting high-quality economic development. At the end of July 2023, the loan balance of the FTU unit in the Free Trade Zone of Bank of Communications Shanghai Branch was nearly 20 billion yuan.

Make global resources available to businesses

The important mission carried by the Shanghai Pilot Free Trade Zone and the Lingang New Area is to play a leading role in high-level reform and opening up, create an important platform for participating in global industrial and supply chain value chain cooperation, enhance the linkage effect between domestic and international markets and resources, and form a new pattern and advantages of comprehensive opening up. Through a series of business innovations, the Shanghai Branch of Bank of Communications has effectively enhanced the global resource allocation function, allowing enterprises to feel the institutional dividends of the free trade zone.

In December 2013, the Shanghai Branch of Bank of Communications, in collaboration with the Hong Kong Branch of Bank of Communications, jointly issued a cross-border RMB 100 million overseas loan business to Shanghai Waigaoqiao Co., Ltd., becoming the first financial innovation business among peers in the Shanghai Free Trade Zone. This business utilizes the innovative policy of allowing eligible enterprises within the free trade zone to borrow RMB funds from overseas, breaking through the limitations of foreign enterprises borrowing foreign debts based on betting differences in the past, and Chinese enterprises applying for foreign debt quotas requiring individual approval. By leveraging the overall cooperation of Bank of Communications Group and its global credit advantages, we aim to change the traditional credit model of introducing overseas funds through financing guarantees, achieve resource sharing and complementary advantages between domestic and overseas banks, and directly introduce low-cost overseas funds for domestic enterprises.

Two years later, Bank of Communications innovatively launched "in memory FT loans" and "FT in deposit loans" businesses. Guarantors do not need to open financing guarantees according to traditional practices, simplifying cross-border guarantee processes, saving guarantee fees and improving lending efficiency. More and more "going out" and "bringing in" enterprises can use this innovative solution to achieve guaranteed financing. In the same year, Bank of Communications also launched a comprehensive consortium project with multiple varieties of FT, factoring, and liquid loans, and won the "Best Project of the Year" and "Leading Bank Award" from the Shanghai Banking Association.

Free trade zones have unique institutional advantages, and the financial services provided by Bank of Communications have allowed many enterprises to take the lead in trying new things. Bank of Communications issued $100 million of offshore loans to Alipay Holding Co., Ltd. through its offshore bank account to support its overseas mergers and acquisitions to pay for equity transfer. This business successfully supports international mergers and acquisitions of domestic enterprises, and also helps domestic banks break through geographical restrictions, change the original single financing model mainly based on domestic guarantees and external loans, and solve the difficulties of domestic enterprises being unable to fully utilize domestic and foreign markets to obtain financing. By providing diversified financing services to both domestic and overseas markets, we can greatly reduce capital costs, enhance price competitiveness, simplify operational processes, and truly benefit enterprises.

China Aluminum Group established China Copper International Trade Group Co., Ltd. in Shanghai in 2018, and its physical smelters conduct unified procurement of raw materials and external sales. With the help of financial innovation policies in the free trade zone, the Shanghai Free Trade Zone Branch of the Bank of Communications has developed an exclusive financial service plan based on the needs of enterprises. It uses short-term import and export financing to meet the funding gap of single advance payment and later collection for enterprises, and comprehensively utilizes trading tools in the currency market, foreign exchange market, and derivatives market to meet the large advance payment financing needs of customers, thereby reducing the overall financing cost of the company. With the financial assistance of Bank of Communications, the company's business scale has increased from 30 billion yuan at the beginning of its establishment to over 130 billion yuan by the end of 2022, and the enterprise has achieved significant development.

Financial innovation and development are never-ending

This is a great era of ups and downs, and a great cause of reform and innovation. The Shanghai Branch of Bank of Communications actively leverages the advantages of the pilot free trade zone as an innovative hub, reshapes its business model, innovates its open organizational structure, strengthens internal linkage within the Bank of Communications Group, and enhances its ability to serve the real economy.

In October 2014, Bank of Communications Financial Leasing Co., Ltd. established Bank of Communications Aviation and Shipping Financial Leasing Co., Ltd. in the Shanghai Free Trade Zone. Relying on the innovative policies of the Shanghai Free Trade Zone, it vigorously expanded its aircraft and ship leasing business, and promoted its leasing business to be at the forefront of the market.

In June 2020, the Offshore Financial Business Center of Bank of Communications settled in the Lingang New Area, becoming an important window for Bank of Communications Group to support the construction and development of the Shanghai Free Trade Zone, promoting the integration and development of offshore business service system and new area construction, supporting the construction of key industrial clusters, new area fund centers, and the cultivation and growth of cross-border financial comprehensive services and customer groups.

In November 2020, Bank of Communications Financial Technology Co., Ltd. settled in the Lingang New Area. The Shanghai Branch of Bank of Communications, in collaboration with Bank of Communications Jinke and Lingang Transportation, successfully completed the loading and debugging of the digital currency equipment for the first hydrogen energy bus line and medium capacity demonstration line in the new area, and took the lead in realizing the application and landing of digital RMB in the field of Lingang intelligent transportation.

Faced with international high standard economic and trade rules such as CPTPP and DEPA, Bank of Communications is responding to higher requirements with high-quality development and digital transformation. It is considering and promoting related work from the perspective of financial services, focusing on new carriers such as "Silk Road e-commerce", accelerating digital transformation, targeting cross-border data flow, paperless trade, data industry, digital inclusiveness, foreign investment access, and other major directions. It actively promotes business innovation and research and development, and actively promotes efforts in digital trade fields such as electronic bills of lading and electronic invoices.

Bank of Communications will actively serve market entities related to "Silk Road e-commerce", explore self built cross-border e-commerce payment service platforms, actively connect with "Eastern Silk Road" to provide freight logistics financial services, and actively support overseas warehouse operation enterprises in building overseas warehouses in target market countries.

At the same time, the Bank of Communications will continue to promote the cross-border use of the RMB, relying on the new generation of online banking to enhance and expand the electronic channel functions, and provide enterprises with integrated cross-border financial services such as deposits, loans, remittances, withdrawals, and certificates online. At the same time, we will vigorously promote the construction of the RMB cross-border payment system ecosystem of Bank of Communications, expand the application scenarios of innovative products, and provide one-stop cross-border financial services for enterprises.

Rivers flow and rise with thousands of atmospheres. Sailing on a long journey requires the courage to advance in the rapids. The 20th National Congress of the Communist Party of China clearly proposed the "implementation of the strategy to enhance the pilot free trade zone". The Shanghai Pilot Free Trade Zone is planning to promote deeper reforms, higher levels of openness, and greater innovation, accumulating new experience for the national reform and opening up. Facing the wave of reform and opening up, the Shanghai Branch of Bank of Communications will make persistent efforts to continue to serve the construction of the Shanghai Pilot Free Trade Zone and the new area adjacent to the port at a new starting point, promote the high-quality development of the "pilot field" of reform and opening up with the help of finance, and make new and greater contributions to writing a new chapter of Chinese path to modernization in Shanghai.