Bank of China sets city as yuan-trading center

The Bank of China officially opened its national headquarters for yuan operation in Shanghai Tuesday to support the city's goal of becoming a trading center of the Chinese currency.

"The inauguration of Bank of China's yuan trading headquarters has a strategic importance of promoting Shanghai as a global center in yuan trading, pricing and clearing by 2015," said Shanghai Mayor Han Zheng at a ceremony marking the occasion.

Xiao Gang, Bank of China's chairman, said setting up the yuan trading headquarters is an important step in the bank's restructuring and cross-border development.

The headquarters in the Pudong New Area offers yuan trading, financial institutions and cross-border yuan settlement services. A source at the Bank of China told Shanghai Daily yesterday that the bank got approval from China's banking regulator a few days ago.

Shanghai aims to be the global center of yuan trading, pricing and clearing by 2015 as part of its 12th Five-Year Plan, which is a major step toward becoming a global financial center by 2020.

Shanghai Vice Mayor Tu Guangshao, who is in charge of the city's financial market supervision, said in May last year that Shanghai welcomed large state-owned banks to set up second headquarters in the city.

"The move by the Bank of China will certainly help Shanghai accomplish its goal to be a yuan trading center," said Li Wei, an economist from the Standard Chartered Bank.

"The Bank of China made such a decision based on Shanghai's favorable policy and the bank's own future development," he said.

Although Li would not comment on why the other large state lenders have not yet landed in Shanghai, he noted that as banks have been doing more transactions online, the location to introduce yuan trading services is less vital.

China's big four banks, all based in Beijing, reportedly aim to establish their second headquarters in Shanghai to ride on the city's plan to be an international financial center.

The Bank of China is the first and only big-four state-owned bank to open its second headquarters in the city. The others - the Industrial and Commercial Bank of China, the Agricultural Bank of China and China Construction Bank - have not announced such a plan.

China Minsheng Bank, China Postal Savings Bank and the Export-Import Bank of China are also said to be considering setting up their second headquarters in Shanghai.

China's top economic planning body, the National Development and Reform Commission, said in January that Shanghai's financial markets aim to triple transactions to 1,000 trillion yuan (US$158 trillion) by 2015.

The Bank of China's cross-border yuan settlement last year reached more than 1.7 trillion yuan.

Established in 1912, the bank just celebrated its centennial anniversary in February.