Following the announcement by Chinese Premier Li Keqiang during the UK-China summit dinner at London’s Natural History Museum on the evening of June 17th 2014, China Construction Bank (London) Limited (CCB London) was designated as the London RMB clearing bank, the first time such a title has been granted by the People’s Bank of China outside of Asia. It is also the first time for CCB to be nominated as an overseas RMB Clearing Bank.
As one of the world’s pre-eminent banks in RMB business, CCB has attached great importance to its engagement with RMB internationalisation in recent years. As at the end of 2013, the total assets of CCB stood at RMB15.36 trillion, realizing an annual net profit of RMB215.1 billion. The bank was ranked 5th in the “Top 1000 World Banks” by the Banker Magazine, ranked 50th in the “Fortune Global 500” by the Fortune Magazine and ranked 2nd in the “Forbes Global 2000 Leading Companies” by the Forbes Magazine. CCB proactively implements its overseas development strategy by establishing its overseas network in targeted markets including key international financial centres, major economies and the main destination countries for China outbound companies. CCB also actively promotes and participates in cross-border RMB business and development of the off-shore market. Currently, the Bank has a total of 18 tier-one overseas institutions covering 15 countries and regions in 5 continents. This number is expected to rise to 30 in 2015. The domestic and overseas institutions of the CCB have conducted cross-border RMB business with a value of over RMB4.3 trillion for more than 11,000 clients covering 154 countries and regions, with off-shore RMB products in wholesale banking, retail banking, investment banking and wealth management.
As a core member of the City of London initiative on London as a centre for RMB business, CCB London, the wholly-owned subsidiary of CCB Group, has devoted itself to promoting the development of the offshore RMB market in London. In December 2012, CCB London successfully issued a one billion RMB bond, the first RMB bond issued by a Chinese financial institution in London, described as "of milestone significance" in the memorandum of the China-UK economic and financial dialogue. In 2013, CCB London received a RMB1.5 billion capital injection from CCB, making CCB London the first financial institution to hold RMB capital in the UK. In December 2013, CCB held a QFII/RQFII investment forum in the City of London to proactively support the RMB investment quota arrangement agreed by both governments, and this was well received by over 200 European investors. Across this same period, the business of CCB London developed rapidly and in particular its RMB related business.
In 2013, the RMB-denominated assets of CCB London increased by RMB14.1 billion, cross-border RMB settlement amounted to 43.6 billion, RMB transaction volume reached RMB60.3 billion and total assets amounted to USD6.1 billion. CCB London currently ranks second in terms of total assets and RMB assets among UK subsidiaries of Chinese financial institutions.
As one of the most internationalised financial hubs in the world, London has traditionally been an important market for the promotion and use of an internationalising currency. The offshore RMB clearing network in London, with the RMB clearing bank as its centre, will clear RMB directly outside the Asian time zones. London’s time zone advantages will support the efficient flow of RMB capital in Europe and globally. This move will not only boost the economic and trade ties between China and the UK, and even China and Europe, but will also, in the short and long run, facilitate the establishment of London’s offshore RMB centre, so as to further strengthen London’s role as the global financial hub.
CCB’s London clearing bank application is a top priority, supported by a lot of pragmatic and productive preparation. The global RMB clearing network with London at its centre has been established, with the three clearing teams of Beijing, London and New York working on behalf of CCB London’s providing 24-hour offshore RMB clearing capabilities through all time zones.
With its wholly owned subsidiary CCB London positioned as the RMB clearing bank in London, CCB Group has made it its obligation and mission to provide convenient and secured RMB clearing services, to expand an active and ordered RMB off-shore capital market and to establish a well-recognized RMB pricing mechanism for commodities. Based on the local RMB clearing network in the UK, CCB London will soon cover neighbouring regions including the European continent, Africa and the Middle East and establish a global clearing service network centred in London. CCB Group will promote the development of RMB market in the UK by providing more diversified RMB products and improving its market making and quoting capabilities. Concurrently with this, CCB Group will further strengthen cooperation with major UK exchanges and proactively participate in the establishment of RMB pricing mechanisms for financial products and commodities. CCB Group will invest more resources in the UK, support the investment by Chinese enterprises and infrastructure construction in the UK and will lay a solid foundation for the future development of the RMB market. CCB plans to issue a RMB2.5 billion bond in the London market this year.
CCB London will, in accordance with the regulatory requirements of China and the UK, commence operations as the London RMB clearing bank with as short lead time as possible and will provide fair, prompt, accurate and professional RMB clearing and settlement services to participating banks.
