BANK of China (BOC) and Singapore’s government trade agency International Enterprise (IE) Singapore have signed a memorandum of understanding to develop Singapore’s commodity finance and trading, the two said Friday.

    China is stepping into an area where Western banks are now hampered by regulation. It has been pushing to increase its role in the commodity sector for years to reflect its position as the world’s top energy and raw materials consumer.

    Singapore is Asia’s main oil trading hub and its exchange, Singapore Exchange (SGX), also deals in other commodities like iron ore and natural gas.

    BOC already has four regional commodity trading centers in Singapore, London, New York and Shanghai, but this is the bank’s first global business center.

    BOC will offer financial solutions and services for commodity firms through two centers in Singapore, helping them expand into new markets and grow globally.

    A global energy center will provide financing for commodity markets, including trade and structured finance solutions. In addition, a commodity repo business will provide BOC’s branches and subsidiaries support in expertise to conduct commodity repo transactions.

    Repo deals give firms ready access to short-term credit in exchange for goods.

    In Singapore, BOC will focus on clients in IE Singapore’s global trader program, which gives concessionary tax rates for some companies. (SD-Agencies)