Renminbi clearing bank to open in London
Updated: 2014-06-02 01:40
By Cecily Liu in London (China Daily)
|
|||||||||
London sees more yuan bonds on offer |
Yuan among most-used currencies |
The news will be an endorsement for London's efforts to become an offshore yuan center. Other European financial centers in the race to become a yuan center include Frankfurt, Paris, Switzerland and Luxembourg.
An official clearing bank facilitates efficient clearing of offshore renminbi transactions, achieved through the appointed bank's direct cooperation with the People's Bank of China, the country's central bank.
Boleat said having a clearing bank in London will act as a signal for London's growing yuan activities, although activities are already cleared through many commercial banks' own channels.
For example, in December Standard Chartered teamed up with Agricultural Bank of China to provide their own yuan clearing platform, making use of the two banks' expertise and client base in the UK and China.
Boleat's news follows a memorandum of understanding China and the UK signed in April to work together on a clearing bank for London.
A week before that agreement was reached, China also signed a memorandum with Germany to work on appointing a clearing bank in Frankfurt, highlighting the fierce competition between European financial centers for more yuan activities.
Boleat said his team has been working on the idea for some time with the People's Bank of China, Bank of England and many banks in London, and the PBOC has now decided to appoint the clearing bank.
"We assume it's going to be a Chinese bank, because that's the way the PBOC does things," Boleat said.
He said another key announcement is expected on Chinese banks opening new branches, after a long lobbying process to achieve this.
Previously, Chinese banks, as well as many other international banks, were only allowed to set up subsidiaries, which are subject to the strict capital requirements that apply to Britain's local banks, hence the lending and financing capacity is proportional to the balance sheet of the subsidiary itself.
Branches, in contrast, have a lending and financing capacity proportional to their parent company's balance sheet and are thus able to give Chinese companies significantly greater lending and financing services.
In a letter sent by the Association of Foreign Banks to Britain's Treasury in 2012, a group of Chinese banks expressed frustration at their inability to open branches in London.
"The pressure came from the Chinese banks, and that's perfectly proper. Without the pressure from the Chinese banks, it may not get looked at," Boleat said.
Last year, the Bank of England announced foreign banks would be allowed to apply for a branch license, although only for wholesale businesses. Retail businesses still needed to be conducted under subsidiary license, to protect individual depositors.
Although none of the Chinese banks have said they have applied for a branch license, Boleat said the assessment of their applications is already in progress.
"I have no doubt there will be branch licenses in due course," Boleat said.
- Shandong delegation makes rounds
- Hainan Airlines receives its seventh Boeing Dreamliner
- Ma Lin wins Ima Hogg Concerto Competition
- Shuttlecock diplomacy
- Color Run in Birmingham, Alabama
- Comfort Women Memorial Peace Garden opens in US
- China Institute's 88th Anniversary Gala in New York
- BookExpo America held in New York City
Most Viewed
Editor's Picks
Turning Africa's resources into rewards |
Long march to end employment bias |
Missing 'bracelet' sets safety alarm bells ringing |
Hidden dangers, ruined lives |
Meeting mummy in the valley of the giants |
The city that's not forbidden, just avoided |
Today's Top News
Accusations from Abe, Hagel rejected
Chinese publishers adapting to American markets
Helping Asian Americans leverage buying power
China Inst. marks 88th with gala
Air China has non-stop Beijing-Washington flight
CCTV exec suspected of bribery
US has to dump containment fantasy
US soldier freed from Taliban
US Weekly
Geared to go |
The place to be |