The Agricultural Bank of China (ABC) signed in June a cooperation agreement with the China Electronics Corporation (CEC) in which the two partners will cooperate to finance the development of electronic banking services.

The agreement marks another step in China's efforts to reform its financial sector and provides an interesting model of cooperation in which both ABC and CEC stand to benefit.

Benefits all round

Over the next five years ABC will provide financial services to CEC, including clearance, loans, foreign currency settlement and letters of credit. In total, the bank will extend credit of eight billion yuan to CEC and its subsidiaries. CEC will use the finance to develop a capital electronic settlement network.

According to an ABC spokesman, the financing will enable CEC to quicken the pace of developing electronic financial services systems. In return, ABC will deal with all CEC's financial services within three years.

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