The trade financing business of China Minsheng Banking Corporation (600016,1988.HK) generated return on assets (ROA) of five percent while that of the entire banking industry was 1.5 percent, reports yicai.com, citing Lin Zhihong, president of the bank's trade financing business.

According to Lin, the bank plans to acquire a platform and use it to establish a trade finance bank.

Trade financing refers to the provision of trade settlement and financing services, such as letters of credit and the financing of accounts receivable.

According to the report, the total value of China's foreign trade is expected to hit $3 trillion this year, with about 30 percent requiring trade financing.

Eighty percent of Minsheng Bank's revenue from its trade financing business are derived from intermediaries.

New Basel III requirements imposing a 100 percent risk weighting requirement would increase the cost of trade financing, according to the report.

Source:capitalvue