The ready availability of the renminbi in Hong Kong is especially helpful for treasuries, with automated cross-border RMB pooling structures and those with a multi-currency notional cash pool. For example, a company can partially offset a euro debit balance against the equivalent offshore renminbi deposit, without foreign exchange conversion. And this is scalable to include other permitted Asian currencies into the pool.
“You get all the flexibility that comes with retaining Asian currencies but with the advantage of being able to globally use the pooled cash by drawing from a single preferred functional currency account,” said Mr. Fung.
Case study – a corporate treasury centre in action
We can see the benefits of a Hong Kong-based CTC via a case study. Our experience serving a multinational company in the TMT sector shows how regional treasury coverage and direct foreign exchange with multiple markets across Asia delivers both improved coordination and greater transparency.
The company has a multi-currency Asia cash pool, concentrating funds from China, Japan and Singapore. This means that it can draw on any money from the Hong Kong cash pool to provide funding to its European pool, as and when required. Furthermore, the regional treasury is able to closely collaborate with its regional operations, as well as its global headquarters, to ensure that all parties are up to date with the relevant rules and regulations – especially those related to hedging.