By Li Hongmei

Development Bank of Singapore (DBS) yesterday conducted the first trade financing transaction in the Shanghai pilot free trade zone while HSBC opened its sub-branch in the zone as more foreign banks tap the growing business opportunities in the FTZ.

DBS, the biggest lender in Southeast Asia, issued a cross-border letter of credit, a common financing tool in international trade transactions, to Jeans International Trading Co from Zhejiang Province.

Zhang Lifa, president of Jeans Holding, said in a statement that DBS "has addressed our needs to manage funding costs and cashflow more effectively across the region. It has also paved the way for us to capture new opportunities from the FTZ and yuan internationalization."

HSBC, the biggest bank in Europe, said in a separate statement that its new sub-branch in the zone was officially opened for business yesterday.

US-based Citi said earlier this month that its outlet in the zone has provided a yuan cross-border pooling solution for pharmaceutical giant Roche.

This pooling solution will allow global companies to move yuan between their onshore and offshore entities without providing supporting documents or applying for approvals on a deal-by-deal basis.