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Financing Secured by Domestic Enterprises

Overview

The Financing Secured by Domestic Enterprises is a type of international financing guarantee provided by ABC for domestic enterprises investing abroad. Under this service, on the basis that the domestic enterprise (the Applicant) presents the unconditional and irrevocable counter guarantee to ABC, an ABC domestic branch issues a letter of guarantee or standby letter of credit to an ABC overseas branch or correspondent bank (the Beneficiary) for a wholly-owned subsidiary (the Borrower) or affiliate of this enterprise; the overseas branch or correspondent bank then offers financing to the Borrower.

Features

The Financing Secured by Domestic Enterprises mainly supports domestic enterprises for international economic and technological cooperation and competition, facilitates the investment process and effectively addresses the lack of financing sources for overseas enterprises invested by domestic parents. ABC has obtained the approval for a certain line from the State Administration of Foreign Exchange (SAFE). Within this line, the external guarantee provided by ABC will be exempted from case-specific approvals by SAFE, which makes the procedures easy and fast.

Target Customers

1. The Applicant (the domestic entity) shall satisfy the following minimum conditions:

The Applicant is of good credit standing and has adequate capacity of counter guarantee.

The Applicant has been granted a credit line by ABC or has deposited a full margin.

The Applicant satisfies the basic conditions for the applicants of financing letter of guarantees.

The Applicant is willing to provide an unconditional and irrevocable counter guarantee to ABC for providing financing to the Borrower.

2. The Borrower shall satisfy the following conditions:

The Borrower satisfies the relevant national regulations on external guarantee by domestic enterprises.

The net assets of the Borrower shall be 10% minimum of its total assets in the case of an overseas trade enterprise, or 15% minimum in the case of an overseas non-trade enterprise.

The Borrower has been lawfully incorporated abroad.

The Borrower has completed registration for forex affairs with SAFE for overseas investment.

The Borrower shall not operate with a deficit.

The Borrower has sound organization structure and financial management rules.

Other conditions as required by ABC.

Procedures

ABC domestic branch reviews the credit standing of the Applicant, the basic information of the guaranteed enterprise and the provision of counter guarantee after the Applicant applies for letter of guarantee. Then, the domestic branch will issue a letter of credit or standby letter of credit to the Beneficiary, followed by the provision of financing by the overseas branch or correspondent bank of ABC to the Borrower.
Note: Please contact your local branch for detailed information about the service.

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