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[SINGAPORE] Bank of China (BOC) and Singapore's government trade agency International Enterprise have signed a memorandum of understanding to help develop Singapore's commodity trading and financial sectors, the companies said on Friday.
China has been pushing to increase its footprint 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 or natural gas.
To boost its international commodities presence, BOC launched two global commodity business centres in Singapore on Friday, the first such undertaking by a Chinese bank abroad, BOC said.
The bank would offer financial solutions and services for commodity firms through the two centres, helping them to expand into new markets and grow globally, it added without giving details.
As part of the MOU, BOC would support IE Singapore's move in building new trade flows in new classes of commodities, including gold and diamond financing, said Satvinder Singh, IE Singapore's assistant chief executive officer.
BOC will also be a clearing member for physically settled commodities contracts launched out of exchanges in Singapore, including commodities bourses SGX and Intercontinental Exchange (ICE).
IE Singapore will also partner with BOC to help the growth of Chinese companies using Singapore as a trading hub. "Because of regulatory requirements, some of the western banks all over the world are no longer providing the same size of lines, liquidity as they used to," said Singh. "I think it's very welcoming to see Asian financial institutions like the Bank of China stepping up and being able to commit in building up both in terms of quality of sophistication and in terms of size of liquidation that the market needs."