Mumbai: Standard Chartered Bank (SCB) has entered into a strategic tie-up with Vijaya Bank to become the latter's correspondent bank in 10 Southeast Asian countries.
The 'agency trade services agreement' covers all letters of credit, or LCs, issued by Vijaya Bank to Southeast Asian countries through SCB, Hong Kong.
SCB enjoys a special premium position in Hong Kong. It is one of the note-issuing banks there, and is a market leader. SCB Hong Kong processes the trade activities of many European banks that do not have a presence in Hong Kong/China and other Far Eastern countries.
SCB's Hong Kong trade processing centre, with a staff of 180, performs in excess of 40,000 trade transactions per month. The monthly turnover of these trade transactions is approximately $3.5 billion, making it a top-tier processor of trade business in the global market.
The 'agency trade services agreement' was signed at a press conference by Vijaya Bank chairman and managing director M S Kapur and SCB CEO (India region) Chris Low. Under the agreement, Vijaya Bank will direct its LCs to 10 Southeast Asian countries through SCB, Hong Kong, which will then reissue these to the ultimate beneficiaries. Vijaya Bank will benefit from this arrangement by sharing in certain revenue streams that will be captured by SCB, Hong Kong.
Said Kapur: "Vijaya Bank has entered into this partnership with a view to increasing our fee-based revenue streams."
SCB has in the past been associating with Vijaya Bank for the distribution of dividends through its South India-centric network. It has a similar agreement in place with Union Bank of India, and is also negotiating with other public sector banks to be their correspondent bank in Southeast Asia.
In India, SCB ranks among the top revenue earners in the correspondent banking business, providing clearing services in all major currencies.