Bank of Communications Co. was appointed to be the yuan clearing bank in Seoul, the first such mandate for China’s fifth-largest lender.
The People’s Bank of China announced the appointment today in a statement on its website, a day after the monetary authority and Bank of Korea signed a yuan clearing agreement. Seoul is the third city in three weeks to have a lender appointed to settle transactions denominated in the Chinese currency. China Construction Bank Co. was selected for London on June 18, and Bank of China Ltd. was chosen for Frankfurt the following day.
The clearing arrangement “signals the start of an offshore yuan center in northeastern Asia and will facilitate a win-win situation for bilateral trade between China and South Korea,” Bank of Communications said in an e-mailed statement today.
President Xi Jinping and South Korean President Park Geun Hye met yesterday and today for talks in Seoul to deepen ties between the two nations. They agreed to set up direct won-yuan trading and South Korea won an 80 billion yuan ($12.9 billion) quota for domestic investors to buy securities in China under the Renminbi Qualified Foreign Institutional Investor program. Quotas totaling 480 billion yuan were previously awarded to Hong Kong, Singapore, London and Paris.
Bank of China is the clearing bank for Hong Kong, Macau and Taipei, while Industrial & Commercial Bank of China Ltd. won the mandate in Singapore. The yuan ranked seventh as a global payments currency in May, according to Society for Worldwide Interbank Financial Telecommunications.
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