Asiamoney New Silk Road Finance Awards

The renminbi is fast becoming a global currency and its use in the Middle East and Africa is rising in line with China’s Belt and Road ambitions in the region. In the last few years, China has agreed bilateral currency swaps with Nigeria, Egypt, the UAE and South Africa, among others, and central banks are looking to include the renminbi as a reserve currency. These measures will bring down the cost of doing business with China and help diversify foreign currency reserves for countries that rely heavily on dollars.

Standard Chartered is a global bank that prides itself on its regional expertise in the Middle East and Africa. Its footprint in Asia, as Carmen Ling, global head of renminbi internationalization and Belt and Road at the bank, points out, gives it a unique viewpoint to support businesses looking for opportunities, finance and advice on cross-border transactions in the region, which continue to grow as the Belt and Road Initiative takes off.

In December, construction work started on one of the most ambitious BRI-related infrastructure projects in central and eastern Europe. The Anaklia Deep Sea Port will not only give Georgia its first deep water port but also provide a new access route to the Mediterranean and western Europe for the landlocked countries of the Caucasus and central Asia.

China Merchants Bank has been a leading proponent of BRI since its inception and has been proactive in developing banking solutions to support Chinese enterprises working in markets along its route.

Issuance of renminbi-denominated bonds by central and eastern European borrowers remained muted last year, with just three panda deals making it to market. Of these, two were launched by Russian aluminium producer Rusal, which in March 2017 became the first international company to make a private placement on the Shanghai Stock Exchange.

In the five years since the inauguration of the BRI project, Sberbank has emerged as one of the main drivers of a new era of collaboration between Russia and China.

With Chinese banks dominating BRI-related financing in central and eastern Europe, the opportunities for involvement by western European and global players have so far been few and far between. Nevertheless, Deutsche Bank, for whom Daniel Qian is head of structured export finance, China, managed to demonstrate again over the last 12 months that there are openings for lenders with regional and sectoral expertise.

Chinese banks have been present in central and eastern Europe for 15 years, but – with the exception of ICBC’s purchase of Turkey’s Tekstilbank in 2014 – outright acquisitions of local lenders have been rare. This makes Citic Bank’s takeover of Kazakhstan’s Altyn Bank, which was completed in May, all the more important.

As the Belt and Road Initiative has gathered pace, it has attracted increasing interest from local, regional and global banks in central and eastern Europe.