Citi, China Construction Bank and ICBC Bank joined the City of London RMB steering committee on Friday, says City of London spokesman Fei Wang. The three banks join Bank of China, Barclays, Deutsche Bank, HSBC, JPMorgan, Royal Bank of Scotland and Standard Chartered on the committee.
The steering committee members are set to meet with Hong Kong authorities in December to continue to develop plans for London institutions to offer RMB services. The City of London committee last met with their Hong Kong counterparts in May.
City of London statistics show that 46% of global FX trading in RMB takes place in London, with customer deposits in the currency totalling RMB35 billion resting in UK accounts at the end of 2011.
Meanwhile, Europe represents 47% of global RMB payments outside of Hong Kong and China. There are also a number of offshore RMB bonds listed on exchanges in London, and several financial institutions in the City are already offering corporate banking and retail services for RMB, according to the City of London figures.
And while some FX market participants argue that London will need an RMB clearing bank if the City becomes a trading hub for the Chinese currency, City of London RMB steering committee policy chairman Stuart Fraser said in April that the creation of clearing bank is not being planned. Instead London will rely on Hong Kong to provide currency-conversion services to banks in the City.
“We’re using Hong Kong’s [clearing infrastructure] and intend to continue to do so,” said Fraser when asked whether London would seek its own clearing bank, explaining that Hong Kong’s clearing infrastructure is efficient enough to support the needs of London while it continues to develop its offshore RMB trading capabilities.
“We said we would use Hong Kong for [clearing] because we didn’t see any point in replicating a system that works perfectly well,” Fraser told Asiamoney Plus.
Nonetheless, City of London policy chairman Mark Boleat said he fully expects the City’s initiative to bring a full range of RMB services to London that will continue to grow long term.
“Companies are lining up to join it because even if there isn’t much business now, there’s generally the expectation this is just going to get bigger and bigger,” he told Asiamoney Plus in an interview on September 26.
London faces stiff competition for RMB business from Singapore and Taiwan, where authorities in both territories announced plans this year to establish clearing banks for the Chinese currency.
Singapore’s ministry of trade and industry said in July that two eligible Chinese banks operating in Singapore would be granted Qualifying Full Bank privileges, one of which will be authorized as a clearing bank for RMB in the city state. And in August, Taiwan’s central bank signed a deal on a clearing system for RMB that will allow for settlement of trade transactions between China and Taiwan directly in each other’s currencies, avoiding the need to first convert each into USD.