140 Years of Cash Management in China

19 April 2005

Brian TsangSenior Vice PresidentPayments and Cash ManagementHSBC China

Agenda

1. The first 130 Years

2. The recent 10 years

3. Year 2005

4. Next 10 years and beyond

The First 130 Years…

Cash Management in China: Beforehand

Making and receiving payments – “Cash Management” was non-existent

Scattered, independent “clearings”

“Approval” was mandatory

Source of help and advice

The Recent 10 Years

Cash Management in China: The Recent 10 Years

Cash Management concept promoted by multinationals and foreign banks

Vastly improved clearing infrastructure via State Banks and PBOC

Revolutionised / evolutionised foreign exchange regulations

Expanding business scope for foreign bank branches

Trusted advisors from banks, legal/law firms and regulators

Not without its challenges though…

Evolution of Cash Management in China

BasicCash Mgmt.

Activities

Greater focuson

Consolidation

RegionalCash

Management

GlobalTreasuryActivities

STAGE 1 STAGE 2 STAGE 3 STAGE 4

Locally-managedpayments and receipts

Reporting and cash flow forecasting

Day-to-day liquidity management

Consolidation of banking processes

Greater emphasis on controls

Centralized management ofpayments and collections

Increased focus on investments and structured liquidity mgmt.

Global file-based payables & receivables mgmt

In-house bank

Many corporates are now moving into Stages 2 & 3

Regional & Global StrategyEntity-based Deployment

2005: Time to Take Stock Now…

Cash Management in China: What Now?

Integrated Delivery Channels

HSBCnet

(Internet)

HSBC Connect

(Host-to-host)

Customer’s BusinessProcesses

Our Clients

A/RManagement

TreasuryManagement

A/PManagement

ERP/ TreasurySystems

Information Management

Alliance Bank Network

Integrated Receivables Solutions

ReceivablesManagement

System

Payments Advising

IntegratedPaymentsSolutions

Cheque Outsourcing

Electronic payments

Liquidity Management

Solutions

Accountmanagement

Group Liquidity Solution

Group Entrust Loan

HSBC’s Integrated Cash ManagementSolutions mirror your business process management and systems in China

HSBC and Our Partner Banks: Your One-stop Shop

Single interface Connects via… Partner banks Cash management solutions

and

HSBC Connect

Nostro-a/c

Standing Instructions

Simplified Chinese enhanced SWIFT

Host-to-host link

Service Level Agreement

ABC

BOC

CCB

ICBC

BoComm

HSBC and 3rd party a/c reporting

Integrated Payments Solution – HSBC and 3rd party a/s

Integrated Receivables Solution – nation-wide

Integrated Liquidity Management – HSBC and 3rd party a/c

HSBCnet

Combined strengths to meet your needs

Next 10 Years and Beyond…

Nation-wide RTGS clearing infrastructure connected to all local banks and foreign bank branches. Top internet infrastructure

Efficient and effective inter-company liquidity management – inside China and cross-border

Regulations rationalization, “cash trap” will be gone

Converged business scope between foreign banks and local banks

One-off cooperation >> business partnership >> strategic alliance >> systems / operations integration

Cash Management in China: Next 10 years and beyond

INNOVATIONS in GLOBAL cash management FROM CHINA!

HSBC’s Commitment in China

Largest foreign bank branch network

Largest strategic investment in China

China “old hands” with international expertise

Global technology with local touch

As a conduit between our customers and regulators

Your Trusted Advisor For Cash Management in China

Best Cash Management Bank in China and AsiaBest Overall Cross-border Cash Management Bank in Asia (2004)

Best Cash Management Bank awards* (2004)– Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, Taiwan and Thailand

* Domestic business/cross-border

Best Overall Bank for Cash Management in Asia (2003-2005)

Best Bank for Liquidity/Working Capital Management in Asia (2003-2005)

Best Provider of Outsourced Treasury Solutions in Asia (2003-2004)

Best Bank for Payments and Collections in Asia (2003-2005)

Best Bank for Risk Management in Asia (2005)

Best Bank for Money Market Funds in Asia (2005)

Best Cash Management Bank in Asia (2003-2004)

Best Cash Manager – Asia (1999-2004)

Best Cash Management Bank in Asia (2004-2005*)

Best Bank for Payables and Receivables (2004-2005)

Best Bank for Cash Management, Trade, Custody and DRs in Hong Kong (2005)

Thank You