Shanghai Rural Commercial Bank serves high-level opening-up with financial power

Ten years of unity, building dreams together.

In September of the golden autumn, the China Pilot Free Trade Zone celebrates its 10th anniversary of establishment. Over the past 10 years, the Shanghai Free Trade Zone has taken the lead in deepening financial reform and expanding financial openness, and has carried out a series of active explorations.

As a local legal entity bank rooted in Shanghai, Shanghai Rural Commercial Bank was approved as the first institution in the domestic rural credit system to conduct free trade zone business as early as November 2013. In February 2015, it became the first bank in the rural credit system to be approved to conduct free trade zone accounting business. In the past 10 years, Shanghai Rural Commercial Bank has taken the lead in creating a series of free trade businesses in the rural credit system, and has replicated and promoted the "Shanghai experience" of supporting the construction of free trade zones with financial power nationwide.

Realize a "zero breakthrough" in the rural credit system

In August 2014, Shanghai Rural Commercial Bank successfully processed the first cross-border RMB loan business of the domestic rural credit system within the Shanghai Free Trade Zone - in cooperation with overseas financial institutions, providing a cross-border RMB credit line of 200 million yuan to a state-owned development company in the Shanghai Free Trade Zone, and handling a cross-border RMB loan of 50 million yuan. This business has also become one of the first batch of business for the Agricultural Credit System in the Shanghai Free Trade Zone.

Cross border RMB borrowing is one of the most significant financial innovations within the Shanghai Free Trade Zone. However, with its official implementation, Shanghai Rural Commercial Bank has to overcome many difficulties, such as the lack of support from overseas branches, differences in credit culture between domestic and foreign institutions, and further clarification of some operational details.

But none of these can stop the bank from seizing development opportunities, deepening business capabilities, and expanding business scope with determination. Carefully studying the central bank's documents, actively discussing with regulatory authorities, and forming a relatively complete cross-border RMB financing plan... When the demand for enterprises truly comes, Shanghai Rural Commercial Bank is ready, providing effective ways for customers to improve industrial financing efficiency and reduce financing costs, and achieving a "zero" breakthrough for the domestic rural credit system to participate in the RMB internationalization process.

With this successful experience, Shanghai Rural Commercial Bank has gained stronger confidence in utilizing the Shanghai Free Trade Zone to explore new channels for RMB financing, reduce RMB financing costs, and open up domestic and overseas linkage channels. In the past decade, a series of innovations such as external insurance and internal loans under the FT account, internal insurance FT loans, RMB loans under the FT account, and the fully functional cross-border two-way RMB fund pool under the "free trade version" have emerged like mushrooms after rain, injecting financial strength into Shanghai to accelerate the construction of the "Five Centers" and serve the high-level opening up of the Shanghai Free Trade Zone.

Behind these innovations is not only the original intention of Shanghai Rural Commercial Bank to serve the country and the people in finance, but also its determination to continuously innovate and keep up with the times to improve its service level. Taking overseas financing services for overseas enterprises as an example, in April 2021, Shanghai Rural Commercial Bank, based on its previous innovative experience, processed a 6-month overseas payment on behalf of a subsidiary of a certain financing leasing company, with a total amount of 130 million US dollars, for the purchase of aircraft. This business is guaranteed by the domestic parent company, and an FT account is opened for the enterprise through the accounting unit of the free trade zone. With the support of the overseas agency network of Shanghai Rural Commercial Bank, it helps the enterprise obtain immediate low-cost overseas financing, meeting the global procurement funding needs of the enterprise while reducing production costs.

In June 2022, Shanghai Rural Commercial Bank applied a similar business model to the shipbuilding industry. By providing credit services through the sub account accounting unit of the free trade zone, Shanghai Rural Commercial Bank effectively focuses on the financial characteristics of the industry and combines the business advantages of "financing" and "financing" to provide a 3-year FT working capital loan of 5 million US dollars under ship mortgage for an overseas enterprise. This is the first overseas enterprise ship mortgage loan of Shanghai Rural Commercial Bank, and it is also a new sign of the bank's breakthrough from real estate pledge to movable property pledge.

According to statistics, after 10 years of development, Shanghai Rural Commercial Bank's business scale in cross-border RMB settlement has been increasing year by year, expanding its business scope from traditional settlement products such as remittances, letters of credit, and collections to financing under goods and service trade. As of the end of the first half of this year, the total cross-border RMB settlement volume of Shanghai Rural Commercial Bank exceeded 22 billion yuan, with over 5000 transactions, a year-on-year increase of nearly double.

Escort enterprises to achieve stability and prosperity

For the past 10 years, the Shanghai Free Trade Zone has been both a highland for China's opening-up to the outside world and an important platform for promoting the development of foreign trade and foreign investment. To this end, Shanghai Rural Commercial Bank continuously innovates its service methods, providing enterprises with a "package" of comprehensive cross-border financial services, and supporting various types of enterprises to go global through the stage of the Shanghai Free Trade Zone.

The Shanghai Free Trade Zone has three markets, including the Free Trade Zone, domestic and foreign markets, and three types of resources, with a complete set of factor markets. As the only Agricultural Credit System Bank in the Shanghai Free Trade Zone to establish a separate accounting unit, Shanghai Rural Commercial Bank provides financial support for enterprises to expand into the global market through various models such as overseas syndicates, merger and acquisition loans, bilateral loans, and cross-border mergers and acquisitions.

At the end of last year, Shanghai Rural Commercial Bank learned during a visit that a port and shipping company planned to build a green port along the coast of Peru. After the project is completed, it will become a cargo transfer hub between China and South America. But there is a certain funding gap for this project, and it is planned to achieve financing through a consortium. The international port and shipping industry is an important basic service industry and an important part of the "the Belt and Road" construction. Supporting this project is not only helpful for Chinese enterprises to "go global", but also the practical action of Shanghai Rural Commercial Bank in response to the call of "the the Belt and Road".

However, the difficulty of the project lies in its high level of professionalism and strong timeliness - it is necessary to complete the project approval within one month according to the requirements of the consortium's condition list. Considering that the project is an important measure for enterprises to implement the "the Belt and Road" initiative, Shanghai Rural Commercial Bank responded quickly and obtained relevant materials from the consortium, borrowers and guarantors as soon as possible after clarifying customer needs. In order to ensure no mistakes, Shanghai Rural Commercial Bank repeatedly communicated with the bank consortium to confirm the compliance and business logic of the approval materials, and did a good job of pre communication while writing the investigation report, predicting and preparing response plans in advance, and promoting the review progress most efficiently.

In the end, Shanghai Rural Commercial Bank formed a credit plan in just one week, completed project approval within one month, and provided a long-term cross-border syndicated loan of $100 million for the project for 15 years.

The risk of exchange rate fluctuations is also a pain point and difficulty that enterprises often encounter in the process of going abroad. In order to meet the diversified hedging needs of customers, Shanghai Rural Commercial Bank continuously optimizes its services according to the needs of enterprises, launching more than 30 foreign exchange fund products, including flexible forwards, enhanced spot, proportional forwards, and dual currency deposits. Due to the fact that foreign exchange derivative business generally requires enterprises to pay margin or occupy corporate industrial and commercial credit, Shanghai Rural Commercial Bank also launched the "Xinyitong White List" service plan last year, breaking through the traditional credit model and providing enterprises with margin free foreign exchange derivative business services, further reducing the cost of hedging and foreign exchange locking.

"Not only should we help enterprises' go global ', but we also need to make them walk steadily and well." This is the simple wish of Shanghai Rural Commercial Bank and has become a driving force for continuous innovation.

Accompanying the growth of Lingang New Area

On August 20th, the Lingang New Area of China's Pilot Free Trade Zone celebrated its fourth anniversary of unveiling. For the past four years, the Lingang New Area has been benchmarking against the internationally recognized most competitive free trade park, free trade port, and high-level international economic and trade rules, striving to create a special economic functional zone with more international market influence and competitiveness. As of now, a total of 102 breakthrough innovation cases have been formed, of which 48 are national firsts; The cutting-edge technology industry has signed nearly 500 projects with a total investment of over 600 billion yuan; In the first half of this year, the gross industrial output value above designated size increased by 52.6% year on year, and the fixed assets investment of the whole society increased by 57.2% year on year, which has increasingly become the "growth pole" and "power source" of Shanghai's urban development.

In the development of the Lingang New Area, Shanghai Rural Commercial Bank fully participates. As one of the first financial institutions to settle in Lingang, Shanghai Rural Commercial Bank has introduced a continuous source of fresh water for the high-quality construction of the new area.

On the one hand, Shanghai Rural Commercial Bank leverages its advantages in serving science and technology innovation, and combines with Lingang Group to launch the "Lingang Park Science and Technology Innovation Loan" special service plan in 2021, which combines the characteristics of light assets and no collateral, long research and development cycles, and no stable income in the early stages of establishment. It innovatively proposes the "star based loan" concept, comprehensively supporting enterprises in different sub sectors of the park, from chip manufacturing, biopharmaceuticals, artificial intelligence to green environmental protection.

On the other hand, in response to the policy call of "investing early, investing small, and investing in science and technology innovation", we have upgraded the "Lingang Park Science and Technology Innovation Loan" 3.0 special plan. Based on the application for online, digital access, customized credit, and comprehensive services, we will further focus on early stage science and technology innovation enterprises in incubators, characteristic industries in Lingang Park, and diverse needs of science and technology innovation enterprises.

At the same time, strategic alliances are formed with various well-known venture capitalists, industry funds, etc. to create a science and technology innovation ecosystem with high-frequency interaction among multiple stakeholders. As of the end of August, the "Lingang Park Science and Technology Innovation Loan" has benefited 730 enterprises, with a cumulative loan amount exceeding 10 billion yuan.

In addition, in response to the business characteristics and funding needs of Lingang Science and Technology Innovation Enterprises, Shanghai Rural Commercial Bank joined hands with Lingang New Area Management Committee and Lingang Group in 2022 to jointly launch the "Shanghai Rural Commercial Bank Lingang New International Trade Connect" service plan.

Through this service plan, not only can we provide targeted foreign exchange policy guidance and exclusive service plans for high-quality science and technology innovation enterprises, such as launching a special service plan for new international trade enterprises that is "easy to entrust, fast to approve, fast to remit, easy to settle, and fully equipped"; It can also provide credit support for trade financing credit limits for startups that do not exceed the current paid in capital of the enterprise.

In order to further reduce the "bottom cost" of enterprises, Shanghai Rural Commercial Bank actively applied for and was approved to pilot the high-level opening of foreign exchange management reform for cross-border trade and investment in the Lingang New Area, eliminating the circulation of documents between enterprises and banks, shortening business processing time, and effectively improving the convenience of enterprise settlement. As of now, 6 enterprises have applied for facilitation qualifications.

Development never stops, innovation never stops. In the future, Shanghai Rural Commercial Bank will continue to keep up with the pace of enterprises "bringing in" and "going out", research and apply leading financial technology to empower products and services, continuously enrich innovative product shelves and service systems, provide a comprehensive package of cross-border financial services for Shanghai Free Trade Zone enterprises, enhance the ability of cross-border financial services to the real economy, and help Shanghai Free Trade Zone release more innovative "dividends".