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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