Overseas banks are scenting new profits by launching new services aimed at small and medium enterprises with cross-border business.

HSBC said yesterday it has set up a team of 150 staff to work for SMEs with cross-border business in the Yangtze River Delta and Pearl River Delta.

The team is targeting SMEs with cross-border business in Shanghai, Hangzhou, Suzhou, Xiamen, Dongguan, Guangzhou and Shenzhen to help them better manage their capital flow. The bank will also expand to other markets like Tianjin and the Bohai Bay region after gaining experience in the deltas.

Kelvin Au leads the team as senior manager SME business China at HSBC China. Au is a veteran with experience in Hong Kong, where services to SMEs are a main business line for HSBC. The bank will offer services like settlement, payment, and accounts receivable financing.

HSBC found in a survey that there are about 962,000 SMEs whose annual revenue is less than 200 million yuan (US$27.9 million) in the two deltas. About 20 percent are involved in cross-border business.

HSBC is not the only player targeting China's rising SME sector.

DBS Ltd, Southeast Asia's biggest bank, will start offering factoring services to trade-oriented SMEs from April in Shanghai. DBS also plans to expand the services into the Yangtze River Delta.

DBS has already kicked off the service in the Pearl River Delta.

"We have intentionally positioned factoring services as a key component of our total financial solutions to SMEs to enhance their competitiveness in international trade," said Teresa Lin, managing director and head of North Asia enterprise banking, corporate and investment banking.

In a factoring arrangement, the bank provides working capital and credit management services to customers based on the accounts receivable of their buyers.

(Shanghai Daily, February 26, 2008)