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Bank deal to help Volvo lower costs
China Minsheng Banking Corp Ltd signed a co-operative agreement with Volvo Truck Corporation on February 28 in Beijing to provide comprehensive financial services. Instead of only focusing on lending, the agreement also specifies a wide range of services the Beijing-based bank would provide for the Swedish truck producer to help it lower costs during production and distribution in China, bank sources said. The package includes simplified procedures for bill payment and settlement, consumer credit loans, foreign exchange services and domestic and international factoring, through which the bank will help the truck company receive and collect payments in a timely manner from customers. That is expected to lower the overall costs for Volvo Truck's distribution in China by roughly 15 per cent and increase its cash flow, said Zhang Jinshun, deputy general manager of the Business Department of Minsheng. "For a multinational like Volvo, getting sufficient financing is normally not much of a problem," Zhang said. "Many big banks would be willing to lend them funds." But finding ways to provide specialized services that will match the company's diversified demands is another issue. "So we are trying to provide a comprehensive solution instead of only promoting a single product, like loans," Zhang said, adding that the details of the framework agreement are still under discussion. Claes Svedberg, senior vice-president of Volvo Truck Corporation, also said the company was happy to have Minsheng as its strategic partner and would continue to expand its investment and market share in China. Minsheng, the first and only private bank in China, is also planning for a H share offering in Hong Kong, following its A share listing on the Shanghai Stock Exchange at the end of 2000. The H share issue is estimated at around 1 billion, which would further increase its capital adequacy and support its expansion and service upgrades. |
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