Citi Treasury and Trade Solutions
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With ongoing RMB internationalization and the
Chinese government’s easing measures allowing
cross-border RMB pooling in early 2014, the
company, with guidance from Citi, identified an
opportunity to integrate Roche’s China entities
into their global pooling structure. This would
decrease the need for external financing, and
reduce their foreign exchange exposure as well
local bank counterparty credit risk exposure.
The Solution
Partnering with Citi, Roche had participated
in PBOC’s pilot RMB Cross-Border Pooling
Program in 2013. Citi worked on the proposal
and application materials to PBOC, and
facilitated face-to-face meetings with the
regulator to demonstrate the background,
needs, flows and benefits of Roche’s
cross-border pooling solution.
With the launch of the Shanghai Free Trade
Zone framework in February 2014, Roche
became one of the first few companies to
receive PBOC’s approval for the structure.
Citi set up Roche’s RMB cross-border pooling
structure with a fully automated sweeping
platform between China and Hong Kong, where
the global pool header has an offshore RMB
account. This included defining key parameters
such as the optimal zero-balance structure,
intraday overdraft facility size, pooling interest
rates, control measures on funding resource and
utilization to be in compliance with PBOC
regulations, as well as reviewing and finalizing
the agreements for local and cross-border
pooling, and the facility agreement. Internally,
Roche also embarked on an SAP reconciliation
initiative, under which the pooling transaction
entries will be reconciled automatically by SAP.
Automated reconciliation is enabled by Citi’s
detailed liquidity, interest allocation and
pooling reports.
The Results
Roche had been a pioneer in RMB
internationalization for both current and capital
account items since 2010. Their RMB cross-border
pooling structure is a landmark solution that
represents the next step in China’s RMB
internationalization reform that brings
increasing operational efficiency to large and
multinational companies.
By integrating China into their global pooling
structure, Roche benefited from the following:
• Improved group liquidity management
• Reduced financing costs for both China and its
overseas entities
• Reduced FX costs as RMB is now centralized
in the group cash pool
• Reduced bank counterparty credit risk
exposure in China
• Elimination of manual work with Citi’s fully
automated RMB cross-border sweeping
platform
Besides RMB cross-border pooling, Roche is also
the company approved by PBOC for RMB
cross-border POBO, ROBO and netting. The
pooling and netting arrangements will take the
company to an even higher level of centralized
liquidity and treasury management.
