Introduction
At the request of parent companies in China, Bank of China issues guarantee in favor of the overseas financial institutions providing financing or credit lines to the local enterprises wholly or partly owned by the parent companies, to guarantee these overseas enterprises fulfill their obligations to repay the principal and interest of loans or the fund according to the credit line agreement.
Functions
Address the difficulties faced by the Chinese-invested enterprises abroad on fund shortage and credit line, and provide financing services for overseas development of the "Going out" enterprises.
Features
Chinese invested enterprises abroad can procure credit support from local financial institutions through bank guarantee obtained based on the strength of the parent companies at home.
Scope of Application
The key industrial and commercial customers of Bank of China.
Application Qualifications
1. The applicant shall have the qualification to engage in underlying transactions;
2. The applicant shall maintain good credit standing without any bad record;
3. The applicant shall have sufficient credit line or be able to pay sufficient margin necessary for issuing the letter of guarantee;
4. The applicant shall possess real relationship of transactions that meets Bank of China's requirements on business compliance;
5. The applicant shall provide complete and valid business information.
Process
1. The customers submits application for letter of guarantee and relevant documents;
2. Bank of China reviews the documents and issues the letter of guarantee;
3. Bank of China charges guarantee fees;
4. Bank of China amends the letter of guarantee;
5. Bank of China makes compensation against the letter of guarantee or cancels the letter of guarantee.
Case
A Hong Kong-based subsidiary company of a large corporation in Beijing needed USD 10 million financing from the local financial institutions as working capital for daily operations, but due to limited strength of the subsidiary, was unable to procure credit line from the local banks. So on application of the corporation, Bank of China head office issued a financing letter of guarantee for the subsidiary in Hong Kong in favor of Bank of China (Hong Kong), guaranteeing the subsidiary company will repay the principal and interest of loan on time. With the guarantee of Bank of China head office, Bank of China (Hong Kong) granted the subsidiary company a loan of USD 10 million to solve its financing difficulty.
Company A in Singapore needed a project loan from a local bank for an overseas acquisition project. Considering reasonable tax avoidance, it applied to Bank of China for issuance of a financing letter of guarantee, with which its subsidiary procured the acquisition loan from Bank of China based in Singapore. This solution saved USD millions of tax in contrast to direct financing in China.
Company B set up a wholly owned subsidiary company in Europe as a manufacturing and sales platform for its European business. And it needed to lend EUR 8 million from a local bank to expand production and operate business. Bank of China proposed to resolve this need with financing guarantees for overseas investment; namely, the parent company of B company in China applies to Bank of China for issuance of a financing guarantees, with which the overseas subsidiary company could procure a loan or credit line from local branches of Bank of China, and fulfill the obligation to repay the fund according to the credit agreement.
Our Advantages
1. The State Administration of Foreign Exchange (SAFE) approved a special line for "Financing Guarantee for Overseas Investment", within which Bank of China can issue guarantee for eligible companies without approval of SAFE.
2. Bank of China has more than 600 overseas branches, subsidiary companies and representative offices worldwide in 29 countries. As the top internationalized bank in China, it is able to provide a good overseas financing platform for the "Going out" enterprises.
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