Cross-Straits Direct L/C Transaction Realized

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Last updated at: (Beijing Time) Tuesday, August 20, 2002

Cross-Straits Direct L/C Transaction Realized

Banks on the mainland of China and in Taiwan have recently established direct L/C (letter of credit) business relations, making closer the financial ties between banks across the Taiwan Straits.

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Banks on the mainland of China and in Taiwan have recently established direct L/C (letter of credit) business relations, making closer the financial ties between banks across the Taiwan Straits.

The Shanghai branch of the Bank of China for the first time sent a letter of credit worth some one million US dollars recentlyto its banking partner in Taiwan, the Taipei branch of the Australia-New Zealand Bank (ANZ), without the usual involvement ofa third bank.

The direct L/C business signals a milestone in direct settlement business between the banks on the two sides of the Straits, financial experts in Shanghai said.

Financial dealings between the two sides have had to go througha third bank outside the Chinese mainland and Taiwan, such as in Hong Kong or New York, leading to unnecessary procedures that reduced the efficiency of banking business and funds management.

Due to the establishment of mutual agent-bank relations betweenselected banks, the transfer time of a single cross-strait L/C business has been decreased by between three and eight days.

The Bank of China said it has arranged for the Taiwan branchesof six foreign-funded banks like Citibank and HSBC to become bank agents.

In June 2001, Taiwan decided to allow local banks' off-shore business units to deal directly with both overseas and domestic banks on the mainland. By June 2002, 27 Taiwan banks' off-shore business units had obtained permission to conduct such direct business.

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