Treasury Today Country Profiles in association with Citi
Treasury Today in China Issue 3 2007 Buy print copy button

July 2007

Editorial

Quarter Three 2007

At the end of April, four foreign banks – HSBC, Citigroup, Standard Chartered Bank and Bank of East Asia – were officially granted local status in China, enabling them to begin trading in RMB. The banks are the first foreign banks to be granted local status following the regulations announced in November 2006 in compliance with China’s WTO agreement.

As China’s banking industry continues to develop, the range of products offered by banks is likely to expand. In this month’s Finance A-Z we look at over the counter (OTC) contracts and consider the changes that are likely to take place in China’s OTC market as part of the reform process currently taking place in the financial sector.

Meanwhile, reforms are also playing a role in the area of mergers and acquisitions. In recent years, M&A activity in China has accelerated as foreign investors have looked to enter the Chinese market by acquiring domestic companies. In response to this, a new set of regulations governing the acquisition of domestic companies by foreign investors was adopted in September 2006. M&A activity is also likely to face further restrictions when the long-awaited Anti-Monopoly Law is officially adopted, a move which is expected later in 2007. In this quarter’s Cash Management article we consider the basics of M&A transactions, the financing techniques which may be used and the restrictions on M&A activity in China.

Focusing on treasury operations, this quarter we look at one of the key principles of treasury controls, the segregation of duties. In order to safeguard against the risk of human error or deliberate fraud, it is essential to ensure that different treasury activities are adequately separated. We look at the objectives of segregation, the process that should be followed to ensure the correct controls are in place, and the obstacles that may be encountered.

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