Kuala Lumpur: CIMB Bank today announced that it has completed Malaysia's first live Bank Payment Obligation (BPO) transaction with receivables financing. This also marks the first cross-border collaboration involving inter-bank BPO between CIMB Bank and China CITIC Bank. With the completion of this maiden BPO transaction, CIMB Bank has become the 11thbanking group worldwide to have done a BPO transaction.


Introduced by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and the International Chamber of Commerce (ICC) back in 2013, BPO is an undertaking of a buyer's bank to pay a seller's bank upon successful data matching on the SWIFT's unified electronic platform. It is a trade transformer that combines the best of both Letter of Credit and Open Account Trade in terms of risk mitigation and flexibility in facilitating international trade. In addition to leading the first BPO in Malaysia, CIMB Bank is also proud to offer post-shipment financing for BPO transaction in helping customers to unlock trapped cash and generate liquidity to fuel business growth.

"CIMB Bank is pleased to be the first bank in Malaysia to facilitate a live BPO financing transaction aside from joining the ranks of the 57 BPO ready banking groups worldwide*. This successful transaction was made possible through our alliance with China CITIC Bank. Against the backdrop of robust intra-Asian trade growth and as top tier banks in our respective regions, both CIMB Bank and China CITIC Bank represent the natural fit to collaborate in this new trade settlement method. This BPO collaboration lays a strong foundation for both Banks to collaborate further in the China-ASEAN trade flows moving forward," said Dato' Lee Kok Kwan, Chief Executive Officer of Corporate Banking, Treasury & Markets, CIMB Group.

Liu Yong, General Manager of International Banking, China CITIC Bank also said, "Today marked a crucial milestone in our collaboration with CIMB Bank to have the first live BPO transaction for both of our valued customers. We are confident that this alliance will bring great value and will resonate with our discerning customers who seek more cost-effective settlement tool that accelerates the payment cycle. It is our hope that the success of this collaboration will pave the way for us to collaborate on a wider scale with CIMB Bank in Malaysia and in other parts of ASEAN countries in the future."

BPO, as an alternative payment method, offers access to liquidity and provides risk mitigation of a Letter of Credit while advocating operational efficiencies and flexibility of an Open Account Trade. It reduces tedious and manual document handling, boosts overall operational efficiency and accelerates payment cycle between buyer and seller. Through BPO, a seller can shorten its days sales outstanding (DSO) by approximately 10 days through eliminating tedious document checking and the risk of discrepancy dispute, thus reducing overall cost.

"It is a paradigm shift from 'document-based transaction' to 'electronic-based transaction' within the international trade landscape. Physical documents no longer have to be eyeballed by all parties involved through manual checking. Through our investment in innovation, customers can now harvest BPO's benefits to enhance risk management with payment certainty, reduced time and cost savings through shorter process turnaround," Lee shared.

He added, "The BPO solution opens up a new avenue for our customers to conduct international trade transactions efficiently and with flexibility. Tapping into our vast resources and network of CIMB Group in ASEAN, our customers in CIMB Malaysia, CIMB Niaga and CIMB Thai now can conduct BPO transactions with their trade counterparts through the other 57 banks that are BPO ready."

Commenting on this new success story, Franck De Praetere, SWIFT's Head of Payments & Trade Markets, Asia Pacific, said, "SWIFT applauds CIMB Bank for its pioneering role on this strategic innovation. CIMB Bank has demonstrated its commitment to offer the latest payment instrument in international trade settlement and willingness to invest in technology innovation towards this end. In less than six months, the Bank has successfully complied with the ISO 20022 standards allowing collaborative industry innovation for supply chain financing."

BPO is governed by the Uniform Rules of Bank Payment Obligation (URBPO) which is developed by the International Chamber of Commerce (ICC) effectively 1July 2013. ICC champions the global economy as a force for economic growth, covering a broad spectrum from arbitration and dispute resolution to making the case for open trade and the market economy system, business self-regulation, fighting corruption or combating commercial crime.

* Source: SWIFT's Market adoption of BPO as at 15th May 2014

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