Columbus, Ohio-based Huntington Bancshares and BankAmerica Corp. have struck a deal to provide trade finance services through a Hong Kong-based Huntington subsidiary.
Under the arrangement, BankAmerica will issue letters of credit through two units Huntington has set up-Huntington Trade Services Inc., in Columbus, and Huntington Trade Services Asia Ltd. The letters of credit will be issued in Huntington's name, and processing will be handled electronically via BankAmerica.
The arrangement is one of a growing number between large banks with computer-driven processing infrastructures and smaller regionals seeking to expand international banking services.
It is the first such trade-related deal for BankAmerica, which has large retail and wholesale banking operations in Asia. Marcia Davis, vice president of BankAmerica's international trade unit in New York, said the company was talking to several other banks but would be "selective" choosing a partner.
The $20 billion-asset Huntington is the fourth midwestern bank that has recently opened offices in the Far East. In November, First Chicago NBD Corp. opened a branch in Beijing and began negotiating with Asia Commercial Bank and Ong Commodities Company to create a joint venture in futures brokerage in Hong Kong.
Early last year, Cincinnati-based Fifth Third Bancorp. opened a representative office in Hong Kong. And its crosstown rival, Star Banc Corp., reached a trade finance alliance similar to Huntington's with HSBC Holdings PLC, the London-based banking group and parent of Marine Midland.
Huntington is aiming its new international services at several large corporations as well as wholesale distributors of retail goods and manufacturing companies sourcing parts in Asia.
Over the past six months, Huntington has also formed alliances with banks in Taiwan and Italy to improve international services and reduce costs. Huntington officials declined to disclose the names of the two banks.
"Our customers buy and sell a tremendous amount of goods through Hong Kong," said Carol A. Degnen, senior vice president and manager of international services at Huntington.
She said that Huntington is "aggressively working to stay ahead of the rapid changes in international trade."
BankAmerica and Huntington have set up electronic links that will permit the San Francisco-based giant to issue a letter of credit in Huntington's name via the Hong Kong subsidiary. The two banks will share in the fees.
"Rather than investing in offices, people, and equipment, we'll be using the offices of BankAmerica," said William Slutz, vice president and import product manager at Huntington.
He added that the arrangement will help cut five to seven days off the processing time it takes to turn shipping documents into payments by using electronic services through BankAmerica to avoid duplicate processing and courier services.
Under the arrangement, Huntington will assume credit risks while BankAmerica assumes responsibility for any processing mishaps.
