Excerpt:
A RMB Yuan (CNY) clearing bank will be officially appointed in the United Kingdom (UK) in June, said Mark Boleat, policy chairman for the City of London Corp, in an interview at the weekend.
“There will be a clearing bank in London. In due course, there will be an announcement,” Mr. Boleat said. 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 (PBOC) , the country’s central bank.
Mr. 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 (LO:STAN) teamed up with Agricultural Bank of China to provide their own Yuan clearing platform, making use of the 2 banks’ expertise and client base in the UK and China.
Mr. 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.
Mr. Boleat said his team has been working on the idea for some time with the People’s Bank of China, Bank of England (BOE), 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,” Mr. Boleat said.
He said another key announcement is expected on Chinese banks opening new branches, after a long lobbying process to achieve this.
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