About the product
The domestic company applies to the Bank, and the Bank issues financing guarantee or standby letter of credit to an overseas bank, and the overseas bank issues loans to overseas affiliates of the domestic company based on the financing guarantee or standby letter of credit of the Bank.
Product features
1. A convenient channel for enterprises to obtain overseas low-cost funds.
2. Effectively resolve the local financing difficulties of overseas platforms or affiliated companies of domestic enterprises.
Application
Domestic enterprises that have set up overseas subsidiaries or overseas affiliates need to raise funds from overseas banks to support the business development of their overseas companies.
Rate
0.25‰-1%/quarter of the amount of the financing guarantee or the standby letter of credit, with a minimum of 1000 yuan/quarter. Overseas financing interest rates and fees are determined by overseas financing banks.
Handling process
1. Domestic companies apply to the Bank to open RMB/foreign exchange loan guarantee or standby letter of credit in the form of comprehensive credit or full deposit.
2. The Bank issues RMB/foreign exchange loan guarantee or standby letter of credit to the overseas bank.
3. The overseas bank provides credit to borrowing enterprises (overseas affiliated companies of the domestic enterprise) (the credit procedure can also be operated in advance).
4. The overseas bank issues loans to the borrowing enterprise with loan guarantee or standby letter of credit issued by the Bank.
Case
Company B is a subsidiary set up by domestic Company A in Hong Kong in March 2014 as its overseas purchaser as raw materials. Being a newly-established company, it is difficult to raise funds from overseas banks due to its size and business restrictions, and its business development is restricted. In order to meet the financing needs of Company B, the Bank put forward the business plan of Overseas loan under domestic guarantee. With a 100% RMB one-year fixed deposit of 3.3% as the pledge of RMB 61.1 million, the Bank opened a standby letter of credit for foreign currency loans to the overseas correspondent bank, and the overseas correspondent bank issued a loan of USD 10 million to Company B with the standby letter of credit opened by the Bank, with a loan interest rate of 2.6%, which solved the problems of Company B such as capital shortage and market development, and helped Company A obtain the difference income of about RMB 120,000 (6,110 * 3.3%-1,000 * 2.6% * 6.12-6,110 * 5 ‰), with 5‰ being the handling fee of the standby letter of credit.
