www.handelsbanken.com/capitalmarkets
Handelsbanken Shanghai
Helping your business succeed in China
Your local banking partner in Greater China

Svenska Handelsbanken opened a representative office in
Beijing in 1982 and became the first Swedish and Nordic
bank with an office in China

Branch office in Hong Kong opened in 1988, today the only
Nordic bank with a branch office in Hong Kong

Representative office opened in Taipei in 1990, until today
the only Nordic bank with an office in Taipei

Branch office in Shanghai opened in 2005, once again the
first Nordic bank with a branch office in China

In February 2009 Svenska Handelsbanken Shanghai branch
became the first Nordic bank to be granted a RMB business
licence

Svenska Handelsbanken is also the only Nordic bank with a
leasing company in China

Svenska Handelsbanken is also the first Nordic bank to
issue an off-shore RMB bond

President Hu Jintao shaking hand with Mr. Pär Boman,
President and Group Chief Executive of Svenska
Handelsbanken, in June 2007 at Handelsbanken’s office in
Stockholm
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30 years experience of banking in Greater China
Handelsbanken’s history in China
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Handelsbanken Shanghai services overview
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Leasing
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Finance Lease
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Operating Lease
FX spot
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FX forwards
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Deposits
Accounts
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Local currency accounts
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Foreign currency accounts
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Internet banking
Global Online
Shanghai
Treasury
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3
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Trade finance
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L/C
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Guarantees
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Discounting of Bills & BAD
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Financing
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Working capital loans
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Fixed-asset loans
Payments
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Domestic payments
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Cross-border payments
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Entrustment loans
Accounts and internet banking
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Accounts
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2
Internet banking
Foreign currency accounts
Global online
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Current account (used for daily transactions)
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Pledge deposit (cash collateral as security for guarantees, L/C etc.)
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Capital account (used for registered capital injection)
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Temporary capital account (pre-operating expenses – can be converted
into capital account)
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Representative office account
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Offshore account (for offshore company’s settlement with China)
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Escrow account
Local currency accounts
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Ordinary account (for daily transactions, loans, call deposit and etc.)
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Temporary account (handling of temporary operations)
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Special account (used for special business related to governmental
projects)
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Term deposit account (term deposit of minimum CNY 1m as regulated for
individual account)
Note: 1) CNAPS is a local currency settlement system in China
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Communication methods
–
Account information (balance/transaction enquires)
–
Cross-border payments
–
Domestic payments
Information in real-time for Handelsbanken accounts with internet
available at any place in the world
Payments/cash management and financing
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Payments and cash management
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Financing
Foreign currency payments
Working capital loans
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Incoming payments (e-port card needed for customs clearing for trade)
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Outgoing payments
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Domestic payments (only when payer and payee are the same company)

Payments are subject to documentation requirements according to
Chinese foreign exchange regulations
–
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Credit vouchers
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Cheques
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T/T through CNAPS1
Entrustment loans
Only possible between sister companies
Note: 1) CNAPS is a local currency settlement system in China
Foreign currency
Fixed-asset loans
Short-term loans
–
Local currency payments
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Foreign and local currency
Long-term loans
–
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Short-term loans
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Foreign and local currency
Long-term loans
–
Foreign currency
Trade finance and treasury
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Trade finance
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Treasury
Letter of Credit (“L/C”)
FX Spot
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Local currency vs. foreign currencies (i.e. SEK, EUR, USD, etc.)
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Foreign currencies vs. foreign currencies
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Export business
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L/C advising, L/C confirmation, L/C discounting
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Bill discount (Bill includes shipping documents, packing list and etc.)
Import business
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L/C issuing
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Bill discount
FX Forwards
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Always local currency vs. foreign currencies (i.e. SEK, EUR, USD, etc.)
Documentary collection
Deposits
Guarantee issuance (foreign and local currency)
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Bid bond guarantee
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Advanced guarantee
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Payment guarantee
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Performance guarantee
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Warranty/court/customs guarantee
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Advanced payment guarantee
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Rental guarantee
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Shipping guarantee
Discounting of Banker Acceptance Draft “BAD”
Discounting of Receivables
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Deposit rates fixed by Peoples Bank of China
Leasing
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Leasing
Finance lease and operating lease
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For new fixed assets investment
–
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Cars, production equipment and machine etc.
For acquiring working capital based on the assets on your book through
Sale & Lease Back structure
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Total investment and shareholder capital
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Graphic overview
Total investment
Total
investment
Registered
capital, %
Minimum
Registered
Capital
USD 3m
or less
70%
N.A.
USD 3–10m
50%
USD 2.1m
USD 10–30m
40%
USD 5m
USD 30m
or more
30%
USD 12m
On-shore debt unlimited
Registered capital
Shareholder’s equity
at inception
Off-shore
debt
Company Foreign
Debt Quota
On-shore debt
Additional on-shore external
financing from banks in China
 The registered capital is a function of the WOFE’s total investment size (see table above)
 The remainder between the total investment and the shareholder capital is the company’s Foreign Debt Quota
“FDQ”. This quota defines the maximum amount of off-shore debt a company can borrow
 A company’s FDQ can be used for short-term and long-term loans
 Note that usage of long-term loans will “eat up” the FDQ for good
Entrustment loans
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Process overview
Comments

In China corporations can distribute and transfer funds within
the group by means of entrustment loans

For RMB transfers there is no need to have locally
incorporated holding companies

The transaction is based on a three-party lending agreement
between the two sister companies and the Agent Bank
Agent Bank
How it works

Cash rich Company A provide funds of RMB 5m to sister
Company B through the Agent Bank

The Agent Bank collects interest of [x]% p.a. from sister
Company B and transfer it back to Company A
– The interest rate should be based on the arm’s length principle
Company A
Company B
Loan agreement: RMB 5m
Tenor: 6 months
Fixed interest rate: [x]% p.a.

If the loan is still needed at the time of repayment a new
agreement will be established between the two parties

Company A pays a commission fee to the Agent bank
Discounting of Banker Acceptance Draft
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Process flow overview
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Buyer
Seller
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3
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2
Local Bank
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Handelsbanken Shanghai
1
Buyer and Seller establish a bilateral agreement (stipulating invoice tenor, price etc.)
2
Buyer uses its local bank to issue a Bankers Acceptance Draft “BAD” based on the two parties bilateral agreement. The BAD tenor
cannot exceed 6 months according to PBOC regulation
3
The Buyer forwards the BAD to the Seller
4
Delivery of goods takes place
5
Seller transfer the BAD to Handelsbanken Shanghai
6
Handelsbanken Shanghai pays Seller discounted purchase price of the BAD
7
The Local Bank pays invoice to Handelsbanken Shanghai on the maturity date of the BAD
Forward exchange contract
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Process flow overview

A company know that they will pay-out a dividend to its parent company in USD three months from now

By using a forward contract the company can lock in the CNY/USD exchange rate today
3 months
FX forward
01Jan
01 Apr
Fixing price for buying USD
and selling local currency
Buying USD
 A forward exchange contract or a “FX forward” is a binding contract to buy or sell a certain amount of foreign
currency at a pre-agreed rate and on a certain future date
 A forward contract is the easiest way of covering exchange risk because it locks in the exchange rate. This
strategy mitigates one of the problems that customer experience when importing or exporting in foreign currency
 In order to carry out a FX forward the customer need to advise the agent bank the amount, the currencies, the
expiry date and whether customer would like to buy or sell the currency
 Our minimum transaction amount is USD 10,000
Global On-line – the link to your international banking transactions
Graphic overview
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Direct online access to summarized account
information for international accounts, both
with Handelsbanken and with other banks
Intra-group transfers
Make transfers between Handelsbanken
accounts and accounts with other banks
Make same-day transfers between
Handelsbanken accounts in different
countries with no loss of interest days
Payment orders in other countries
Execute local payments and cross-border
payments from accounts in other countries
Payments can be made both from a local
account with Handelsbanken or from an
account with another bank in the country
where you wish to execute the payment
Collaboration with international banks
One point of contact for all your international
bank transactions
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