CHINA BANKS GROW PAYMENTS NETWORKS
3,300pc surge since 2009 amid vacuum created by Western lenders
CHINESE banks have dramatically expanded their overseas payment and trade networks since the global financial crisis, exploiting a growing vacuum created by Western lenders, which are retreating from higher-risk jurisdictions, new data shows.
The number of so-called “correspondent” or bank-to-bank relationships operated by Chinese banks surged more than 3,300 per cent — from 65 in 2009 to 2,246 last year — according to data published by United Statesbased payment and compliance technology company Accuity yesterday.
This contrasts with a 25 per cent drop in the number of correspondent banking relationships globally during the same period, largely caused by US and European banks cutting ties with smaller bank clients in regions such as Asia and Africa.
Correspondent banking describes bank-to-bank relationships that allow individuals and companies to move money around the world, facilitating global trade.
Although Chinese correspondent banking relationships have grown from a low base and still account for a small proportion of such relationships globally, the huge jump underscores how Chinese lenders — such as Industrial & Commercial Bank Of China and Bank of China — are fast-globalising to support Chinese companies as they push overseas.
Accuity compiled the data, which was extracted from standard settlement instructions, from an average of 29,000 banks in 238 countries or territories across the world.
Global banks are under intense regulatory pressure to guard against money laundering and terrorist financing by closely screening the source of funds they handle.
US watchdogs had dished out more than US$16 billion (RM69.28 billion) in fines for anti-money laundering (AML) compliance failings since the end of 2009, while banks globally spent an estimated US$12 billion on AML compliance programmes last year, according to data compiled by Quinlan & Associates. Reuters
The Industrial & Commercial Bank Of China are among banks expanding their international payments networks to support Chinese companies as they push overseas.