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Handelsbanken Shanghai

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  1. Handelsbanken Shanghai Helping your business succeed in China

  2. President HuJintao shaking hand with Mr. PärBoman, President and Group Chief Executive of Svenska Handelsbanken, in June 2007 at Handelsbanken’s office in Stockholm 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

  3. 30 years experience of banking in Greater China Handelsbanken’s history in China

  4. Handelsbanken Shanghai services overview 1 Accounts • Local currency accounts • Foreign currency accounts 7 Leasing • Finance Lease • Operating Lease 2 Internet banking • Global Online Shanghai 6 Treasury 3 • FX spot • FX forwards • Deposits Payments • Domestic payments • Cross-border payments • Entrustment loans 5 Trade finance 4 Financing • L/C • Guarantees • Discounting of Bills & BAD • Working capital loans • Fixed-asset loans

  5. Accounts and internet banking 1 2 Accounts Internet banking • Foreign currency accounts • Current account (used for daily transactions) • Pledge deposit (cash collateral as security for guarantees, L/C etc.) • Capital account (used for registered capital injection) • Temporary capital account (pre-operating expenses – can be converted into capital account) • Representative office account • Offshore account (for offshore company’s settlement with China) • Escrow account • Local currency accounts • Ordinary account (for daily transactions, loans, call deposit and etc.) • Temporary account (handling of temporary operations) • Special account (used for special business related to governmental projects) • Term deposit account (term deposit of minimum CNY 1m as regulated for individual account) • Global online • 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 Note: 1) CNAPS is a local currency settlement system in China

  6. Payments/cash management and financing 3 4 Payments and cash management Financing • Working capital loans • Short-term loans • Foreign and local currency • Long-term loans • Foreign currency • Fixed-asset loans • Short-term loans • Foreign and local currency • Long-term loans • Foreign currency • Foreign currency payments • Incoming payments (e-port card needed for customs clearing for trade) • Outgoing payments • Domestic payments (only when payer and payee are the same company) • Payments are subject to documentation requirements according to Chinese foreign exchange regulations • Local currency payments • Credit vouchers • Cheques • T/T through CNAPS1 • Entrustment loans • Only possible between sister companies Note: 1) CNAPS is a local currency settlement system in China

  7. Trade finance and treasury 5 6 Trade finance Treasury • FX Spot • Local currency vs. foreign currencies (i.e. SEK, EUR, USD, etc.) • Foreign currencies vs. foreign currencies • FX Forwards • Always local currency vs. foreign currencies (i.e. SEK, EUR, USD, etc.) • Deposits • Deposit rates fixed by Peoples Bank of China • Letter of Credit (“L/C”) • Export business • L/C advising, L/C confirmation, L/C discounting • Bill discount (Bill includes shipping documents, packing list and etc.) • Import business • L/C issuing • Bill discount • Documentary collection • Guarantee issuance (foreign and local currency) • Bid bond guarantee • Advanced guarantee • Payment guarantee • Performance guarantee • Warranty/court/customs guarantee • Advanced payment guarantee • Rental guarantee • Shipping guarantee • Discounting of Banker Acceptance Draft “BAD” • Discounting of Receivables

  8. Leasing 7 Leasing • Finance lease and operating lease • For new fixed assets investment • Cars, production equipment and machine etc. • For acquiring working capital based on the assets on your book through Sale & Lease Back structure

  9. Total investment and shareholder capital Graphic overview Total investment On-shoredebtunlimited Registered capital Off-shoredebt On-shore debt Company ForeignDebtQuota Additional on-shore external financing from banks in China Shareholder’sequityat inception • 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

  10. Entrustment loans 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 • 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 • 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 RMB 5m RMB 5m Collects Interest Return Interest Loanagreement: RMB 5mTenor: 6 monthsFixed interest rate: [x]% p.a.

  11. Discounting of Banker Acceptance Draft Process flow overview 1 Buyer Seller 4 3 5 6 2 Local Bank Handelsbanken Shanghai 7 • Buyer and Seller establish a bilateral agreement (stipulating invoice tenor, price etc.) • 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 • The Buyer forwards the BAD to the Seller • Delivery of goods takes place • Seller transfer the BAD to Handelsbanken Shanghai • Handelsbanken Shanghai pays Seller discounted purchase price of the BAD • The Local Bank pays invoice to Handelsbanken Shanghai on the maturity date of the BAD 1 2 3 4 5 6 7

  12. Forward exchangecontract 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 01 Apr Buying USD 01Jan Fixing price for buying USD and selling local currency • 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

  13. Global On-line – the link to your international banking transactions Graphic overview • 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