North Asia continues to be a fertile ground for transaction banking services with CFOs and treasurers active in the region looking at various ways to enhance their treasury functions to add more value to their respective organizations.

In the region’s largest market China, treasury executives are turning to their service providers to help streamline operations whether it be through the consolidation of accounts or the setting up of either pan-China or cross-border liquidity structures for better visibility and control.

Key to establishing cross-border cash pooling in China is having clear and consistent communication with Chinese financial regulators on which scheme is best to meet their business needs. Among these regimes are the multi-currency cash pooling regulated by the State Administration of Foreign Exchange (SAFE) and the nationwide renminbi cash pooling and free trade zone cash pooling regulated by the People’s Bank of China (PBoC).   

Technology adoption is of critical importance and companies expect their core banking partners to handle e-tax requests and be tech-ready to execute e-CNY collections in the near term.

The Asset board of editors also observed that several banks have focused on supporting companies in emerging sectors of China’s economy such electric vehicle makers and renewable energy providers looking to expand beyond the domestic market.

Moreover, demand for supply chain finance continued to grow in the country, with treasury executives becoming increasingly aware of the need to have sound working capital. For example, supplier finance was a focus for organizations looking not only to extend days payable outstanding but also strengthen supplier relationships.

Other companies went a step further, working either internally or with third-party platforms in China such as Linklogis and CSCC to craft deep-tier/multi-tier programmes to support second-tier or third-tier suppliers within a robust value chain.

Offshore treasury hub

In neighbouring Hong Kong, there was also a focus on treasury functions to improve operations by adopting more digital processes. During the review period, some companies sought to improve account reconciliation by adopting a mixture of digital solutions including API connectivity, electronic direct debit authorization, and linkage to Hong Kong’s FPS (Faster Payment System) QR code collection infrastructure.

Treasury advisory work was also a key theme for several of the leading transaction banks in the city, as mainland Chinese companies saw value in Hong Kong as an offshore regional treasury hub, the city’s attractive tax policies, and its financial infrastructure.

ESG-focused solutions remained a major theme for Hong Kong-based companies, with several of them leveraging financial products such as bank guarantees and receivables financing with green or social elements embedded to showcase their commitment to sustainability practices.

There was a similar focus on sustainability in South Korea with a number of leading banks offering sustainable accounts and green deposits to companies interested in using their surplus funds to support sustainable loans. Companies also looked to their service providers to streamline account structures. When it comes to trade finance, companies worked with banks to customize and provide the most cost-effective financing to meet their needs.

In Taiwan, banks focused on helping treasury functions add more value to their respective organizations instead of being viewed as cost centres. During the review period, The Asset board of editors came across companies working with their service providers on digital connectivity, whether it be SWIFTNet deployment or API-based solutions. Supply chain finance is a work in progress in the market with a number of firms evaluating service providers focused on documentary trade finance.

At The Asset, we are pleased to recognize the banks that made a difference for their clients in North Asia in 2023.

For the complete list of North Asia winners, please click here.

To learn more about these awards, please click here.

To join the in-person annual celebratory dinner on May 14 2024 in Hong Kong, please contact us at [email protected].