RMB clearing services to debut in UK

Agricultural Bank of China (ABC) and Standard Chartered Bank will offer renminbi (RMB) clearing services in the United Kingdom (UK). the first banks to do so.

The ABC and Standard Chartered signed a memorandum of understanding (MOU) on Monday, through which financial institutions and corporates can work with Standard Chartered UK and ABC UK to execute RMB transactions.

Clearing of RMB transactions in the UK is currently done through a very robust real time gross settlement system in Hong Kong through clearing banks in Taiwan and Singapore or through agent banks in China.

The RMB clearing services in the UK is expected to strengthen London's position as a leading offshore RMB center.

"London's position as a leading international financial center is enhanced by the ability to offer onshore clearing services that allow 'on-demand' access to settle RMB denominated services within the London time zone," said Peter Sands, Group CEO of Standard Chartered, in a statement.

The signing of this strategic cooperation agreement is another major move to foster "a stronger partnership in which we will jointly build the London offshore RMB center and promote the cross-border use of RMB," said ABC president Zhang Yun.

China allows foreign institutional buyers to trade yuan-denominated financial products through a regime called RQFII, or RMB Qualified Foreign Institutional Investor, with a global quota of 350 billion yuan (57.10 billion U.S. dollars).

China's central bank in June signed an agreement to establish a currency swap line with the Bank of England.

Import and export RMB financing totaled 33.6 billion yuan in 2012, up 100 percent from 2011, and the volume of letters of credit and other loan guarantees grew 13 times to 4.7 billion yuan, according to a report released by the City of London in June.

In July 2010, Standard Chartered became the largest banking investor in ABC's H-share IPO and subscribed to 500 million U.S. dollars worth of H-shares.