1.Cross border RMB clearing/settlement services
Leveraging on Bank of China Group’s strength, our bank is able to offer offshore clearing settlement and cross-border RMB remittance to China (excluding “Hong Kong, China”, “Macau, China” and “Taiwan, China”) through the Cross-border Interbank Payment System (CIPS System) and our RMB business clearing bank, Bank of China (Hong Kong) Limited. RMB remittance services are offered to personal, corporate and institutional customers. Cross-border RMB clearing into and out of China (excluding “Hong Kong, China”, “Macau, China” and “Taiwan, China”) must comply with the relevant rules and regulatory requirements of the People’s Bank of China, and trade-related remittance must have a genuine underlying trade transaction.
2.RMB currency spot and derivative products
RMB forex transaction refers to the conversion of one currency (RMB) to another, such as SGD, at an agreed exchange rate on a specified date. FX derivatives products refers to all other forex transactions other than spot transactions. Besides spot transaction services, our bank offers (1) RMB forward products (a customised contract between two parties to buy or sell RMB against another currency on a future date); (2) RMB Non-delivery forward (a cash-settled contract where the profit or loss at settlement date is calculated as the difference between the agreed exchange rate and the fixing rate at the time of settlement, for an agreed notional amount of funds); (3) RMB swap products (a contract where the exchange of the currency pair involved takes place both on a spot date and a specified future date); (4) Option products (a contract that gives the holder the right but not the obligation to buy or sell RMB against another currency at the strike price on a specified future date in exchange of premium) and (5) Other RMB forex derivative products. Bank customers can use these products to hedge their forex risks caused by exchange rate fluctuations.
- Our bank offers a comprehensive selection of products for a variety of currencies against RMB. The tenor of an individual contract can be customised based on customer needs. Bank customers can deal at prevalent market rates at any time to effectively manage forex risks.
3.RMB Interest Rate Derivative Products
RMB Interest rate derivative products include Interest Rate Swaps (IRS) and Cross Currency Swaps (CCS). In a CCS, main currency pair is RMB against USD, customer and bank agree to exchange interest payments and principal on loans denominated in two different currencies. Customers can choose between fixed and floating interest rate. On value date and maturity date of the contract, the principal is exchanged. The interest cash flows are exchanged on the interest payment date. In an IRS, customer and bank agree to exchange periodic interest payments for another based on a specified principal amount for a single currency. One party will pay a floating rate and the other party will pay a fixed rate and principal is not exchanged.
- This class of products are designed specifically for customers to hedge interest rate risks. The structure of individual contract can be tailored to meet customer demand.
4.RMB Money Market Depo
RMB money market depo refers to the borrowing and lending activities in interbank market. For the entire duration of any particular transaction, the borrowing party owns the underlying fund. In exchange, the borrower has to pay for the interest cost incurred to the lender.
- Money market depo can be attained in various tenors. Liquidity is best found within the short to medium term. Interbank money market depo arrangement provides the ease of liquidity management for banks.
5.Offshore RMB Bonds
Offshore RMB bonds refer to bonds issued in “Hong Kong, China”, “Macau, China”, “Taiwan, China” and other countries and regions outside China where the bond is denominated in Chinese RMB and coupon payments are made in RMB. Customers can subscribe to new issue in the primary market or to trade in the secondary market through our bank.
- Offshore RMB Bonds present prospective customer with alternative investment choices which could enhance investor return on RMB denominated assets.
