HSBC is to roll out a two-way renminbi (Rmb) sweeping solution between China and Germany for a corporate client.

The fully automated tool will be made for fastening products manufacturer the Würth Group and the bank says it will allow the company to better manage its liquidity across 50 countries. Germany is the fourth country after Singapore, Hong Kong, and the UK in which HSBC has implemented such a tool.

Head of Rmb internationalisation Vina Cheung tells GTR that this solution, the first of its kind in Germany, will be followed by further tools to service “local market needs”.

She continues: “For a decade, international companies doing business in China have had challenges to effectively redeploy surplus liquidity accumulated in China in a cost-efficient way. Their ability to mobilise working capital in China to contribute to global or regional liquidity optimisation has been limited, resulting in external borrowing costs while surplus liquidity remained unused.

“In recent years the liberalisation of China’s payments landscape has addressed many of these issues. As China continues its capital account liberalisation and Rmb internationalisation directive, cash in China is becoming part of a treasurer’s mainstream cash management approach.”

Along with arguably Citi and Standard Chartered, HSBC has been one of the main proponents of the Rmb’s internationalisation, on the banking side. The People’s Bank of China (PBOC) has been gradually liberalising the currency, mainly based out of the Shanghai Free Trade Zone, but more recently in other parts of China.

Cheung says she hopes the government will continue along this path, adding: “China has an established a three-pronged approach to Rmb internationalisation: expanding the currency’s role in cross-border trade settlement, developing offshore Rmb centres and encouraging a wider use of Rmb in cross-border investment. Rmb cross-border sweeping is one enabler which promotes the circulation of Rmb between onshore and the offshore markets. These are generally the emerging offshore Rmb centres in the process of deepening the Rmb liquidity pools and developing Rmb investment, financing, and hedging/risk management products. Coupled with a strong business relationship with China, Rmb trade settlement becomes a visible option with commercial benefits.”

Würth’s head of treasury management Patrik Imolz says that the company will be better able to service its Chinese clients in Germany now, explaining: “Surplus liquidity can be used to finance other group units, so insufficient liquidity can be balanced out by cross-border transfers, while interest and foreign currency expenses can decline as a result. Currency risks can also be managed centrally from Germany.”