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Talking Shop: Processing Fees for a Domestic Cash Pool in China

By May 6, 2021No Comments

Editor’s note: NeuGroup’s online communities give members another forum to find answers to their questions. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].

Member question: “Has anybody set up a China domestic cash pool? I would like to understand market practice on the bank’s processing fee for this.

  • “[Our bank] is charging us a 0.1% processing fee on the outstanding borrowed balance in the domestic cash pool. Can someone give me a benchmark for this?”

Peer answer: “We have operated a domestic entrustment loan (cash pool) in China with several banks, including [your bank]. The entrustment fee we paid was 8 basis points at the time, but we moved to another provider within the last couple years.

  • “Our experience is that pricing is largely dependent on the size of the pool and related cash management activity with that banking partner.
  • “Overall, we concentrate a lot of our cash management activity to the six global transaction banks in our RCF, which results in significant pricing scale.”

Member response:  “This is very helpful. We have a very tight relationship with [the bank] globally and having this benchmark will help us to get some kind of market indication. I have tried to negotiate our fee down.”

For more on this topic, please see our post from Feb.:Cash Pools in Asia for Corporates Trying to Access Funds in China

Justin Jones

Author Justin Jones

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