Commerzbank signs cooperation framework with China’s largest bank

Commerzbank has entered into a cooperation framework with the largest Chinese bank, Industrial and Commercial Bank of China (ICBC). Commerzbank will support projects linked to Belt and Road Initiative (BRI) with a business volume totalling USD 5 billion in the next five years. are to be supported. “We are the only German bank to have a Memorandum of Understanding with ICBC”, reports Nikolaus Giesbert, Divisional Board Member at Commerzbank. The Chinese “Belt & Road Initiative”, also called the “New Silk Road”, seeks to expand maritime routes and land infrastructure networks linking China with Asia, Africa and Europe to boost trade by connecting and promoting economic cooperation across these continents.

With a banking relationship spanning over 20 years, the two banks have worked on numerous deals together. The new cooperation will create further trade and investment links between China and countries along the route. The agreement seeks to explore further avenues of cooperation in Trade Finance, Corporate Advisory, Debt Capital Markets, Funding & Financing, Transaction Banking and Asset Management and leverage further potential of BRI.

Local and international expertise

These may offer good opportunities for German companies, as Giesbert adds: “As a market leader in German foreign trade it is part of our DNA to guide our clients in their investment ventures abroad. Commerzbank’s strong distribution capabilities in Europe combined with ICBCʼs knowledge of the Chinese market will add value for German and European corporates as they navigate business opportunities along the trading corridors – and at the same time support Asian companies seeking to do business in Europe.”

In addition, companies will also be able to hedge better against the risk of default involved in trade finance transactions and currency losses in countries with a high risk profile, such as Kazakhstan or Belarus. “We are able to support our clients in a majority of the 74 countries along the Silk Road with financial services”, reports Jochen Müller, who is responsible for business with banks in Asia and Latin America at Commerzbank.

In the midst of trade wars and punitive tariffs, Commerzbank is clear in its support of international cross-border cooperation.

However, in respect of sanctions law, special caution is required if the transport takes place via the Silk Road through Iran. The US embargo against Iran prohibits transports through Iran. If a transaction bears a relation to the jurisdiction of the USA, e.g. through the currency USD, the transport through Iran entails a violation of the US embargo. Goods which have been transported through Iran are regarded as Iranian goods under US jurisdiction.