London,
26
June
2015
|
11:31
Europe/Amsterdam

RMB products and services in London show substantial growth

RMB products and services in London show substantial growth

London has continued to strengthen its position as a global centre for offshore RMB business amidst a rising number of global RMB centres and in line with substantial reform in China. Figures from the London market for 2014 show persistent strong growth in RMB forex trading, according to a new report published by the City of London Corporation.

The report is the latest in the series written by Bourse Consult that tracks growth trends in the UK and reviews the latest developments of the offshore RMB market during this period. Major developments over the past year have included, the opening of Shanghai-Hong Kong stock connect, further expansion of RMB clearing banks into a total of 14 offshore RMB hubs and the establishment of the Asian Infrastructure Investment Bank. It also highlights the remaining challenges for the full internationalisation of the currency: how to achieve full capital account convertibility and raise its profile as a mainstream global currency.

In conjunction with the Chinese authorities’ continued policy drive, London’s RMB business had substantial development. Key findings of the report include:

· Particularly strong growth in forex-related businesses in 2014. Overall trading volumes more than doubled in the year up 143% from 2013 figures, with average daily volumes reaching US$61.5 billion, nearly six times as large as those reported in the first survey in 2011.

· In spot trading volumes were up more than three times on the 2013 figure, at US$18.4 billion per day and this figure represents 67% of respondents global business (compared to 57% in 2013).

· 2014 saw total trade finance decline by 17.6% from 2013 figures, due to limited internal quotas in the second half year and Letters of Credit were seen to have become less favour of alternative trading financing products and services.

· Reflecting growing interest in a wider range of RMB products as the market becomes more established, trading of dim sum bonds rose from close to zero in 2013, to ¥4.5 billion in 2014.

· Total deposits at the end of 2014 were ¥20 billion, considerably much higher than the figure at end 2013 (¥14.6 billion) representing a 37% increase. This includes a significant increase in corporate deposits from ¥3 billion in 2013 to ¥8.2 billion.

Mark Boleat, Policy Chairman at the City of London Corporation, said:

“The City of London’s RMB initiative has now entered its fourth year and our latest research strongly indicates the substantial growth of London’s RMB market in both depth and sophistication, with more active market participants. This is not just a UK phenomenon, with the RMB now having joined the top five most-used global currencies the global market is also growing in momentum.

RMB internationalisation is intrinsically linked to market liberalisation and the opening up of China’s capital account and with the Chinese authorities continued reform progress, the opportunities for global market participants and corporates to benefit from the currency’s rise are immense. The next few months promise to be incredibly important with the launch of China’s new international payments system and ongoing discussions over the RMB’s potential inclusion in the IMF’s basket of reserve currencies. The City of London will continue to monitor these developments and their effects on the UK RMB market, which we expect to continue to develop in line with current trends.

City of London’s RMB research publications document the capabilities of London in RMB denominated products and services. The latest report is the seventh and final report in this series. Fifteen UK based banks, which are estimated to represent 85% of market activity, provided data and comments, and the People's Bank of China also contributed background information. The research is conducted by Bourse Consult and commissioned by the City of London Corporation.

Ends

The report is also available to download here.

Notes to editors

  1. Media enquiriesJulie Zhu, Media Officer, City of London CorporationT 020 7332 3451 / M 07912 041 124E julie.zhu@cityoflondon.gov.uk
  2. About the City of London initiativeThe City of London initiative was launched on 18 April 2012. It aims to develop London’s position as the leading western hub for international renminbi (RMB) business - and boost the RMB’s wider international use for trade and investment. The initiative is facilitated by the City of London Corporation, and the current members are Agricultural Bank of China (UK), Australia and New Zealand Banking Group Limited (ANZ), Bank of China (UK), Bank of Communications (UK), Barclays, China Construction Bank (UK), Citi, Deutsche Bank, HSBC, Industrial and Commercial Bank of China (UK), Standard Chartered, JPMorgan and Royal Bank of Scotland, with observers from HM Treasury, the Bank of England, and the Prudential Regulation Authority. The initiative seeks to provide leadership to the wider financial markets on technical, infrastructure and regulatory issues relating to the RMB product and services in London. It also advises HM Treasury on maximising London’s capacity to trade, clear and settle RMB and articulates practical next steps and long-term aims for the further development of the RMB market in London. Additionally, the group advises HM Treasury and other UK authorities on any financial stability concerns members may perceive. More information is at www.cityoflondon.gov.uk/renminbi
  3. About the City of London CorporationThe City of London Corporation is a uniquely diverse organisation. It supports and promotes the City as the world leader in international finance and business services and provides local services and policing for those working in, living in and visiting the Square Mile. It also provides valued services to London and the nation.
  4. The City of London Corporation and ChinaThe City of London Corporation has long recognised the critical importance of China to the UK-based financial services industry. The rapid growth of the Chinese economy brings a demand for international financial services - both to provide capital, risk management and expertise for companies as they expand - and to meet the needs of its growing middle classes, in areas such as savings products, pensions, insurance and wealth management. An important part of the City of London Corporation’s work is to help UK-based firms to access the Chinese market, and to promote a genuinely two-way exchange of trade and investment in financial and professional services. The City of London Corporation engages with the Chinese leadership, regional governments and with Chinese firms to position the City as China’s partner of choice in the provision of financial services, and the UK as a location of choice for Chinese overseas investments. The City of London Corporation’s engagement with China is guided by the City of London Advisory Council for China, a group of senior Chinese financial sector leaders. The Council provides a formal structure for engagement with Chinese financial services firms at a senior level, and expert guidance and advice on the Chinese market. The Council guides the City of London Corporation’s China strategy, and the work of the City of London representative offices in Beijing and Shanghai. More information is at www.cityoflondon.gov.uk/china
  5. About Bourse ConsultBourse Consult LLP, a global financial services consultancy, offers practical advice to exchanges, clearing houses and other market infrastructures, in areas from strategy to detailed execution. Bourse Consult consultants are all experts in their fields, having many years’ experience at the highest levels in the financial services industry. Further details can be found at www.bourse-consult.com