Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

U.K. Yuan Clearing Deal to Spur Trade, City of London Says

June 17 (Bloomberg) -- The U.K.’s pending agreement to appoint a clearing bank for transactions in yuan will be a boon for businesses as it stimulates trade between the two countries, according to the City of London Corporation.

“This simply gives it another push,” Mark Boleat, policy chairman at the local authority that runs London’s financial district, said in an interview today. “Because we are dealing with China, which is still a highly regulated economy, the designation of a clearing bank is politically significant.”

China Construction Bank Corp.’s branch in London said today it will sign an agreement on June 19 to facilitate offshore yuan clearing in London. It will be one of a number of deals announced during Chinese Premier Li Keqiang’s visit to the U.K. this week, including a $20 billion accord for BP Plc to supply liquefied natural gas to China National Offshore Oil Corp.

The clearing bank will facilitate the use of the yuan by banks and other companies conducting international transactions, the Bank of England said in an e-mailed statement March 31. Prime Minister David Cameron, who met with China’s President Xi Jinping in the Netherlands March 25, is looking to boost trade with emerging-market economies and build on London’s capacity as an international financial center.

“We are going to see continued growth of Chinese exports of manufactured goods to Britain, we are going to see a massive increase in the export of services to China,” Boleat said. “For those businesses wanting to do business with China, it is important that there are the financial facilities that back up what they want to do.”

London Payments

More than 60 percent of yuan payments outside China are made in London, the U.K. Treasury said March 26, citing data from the Society for Worldwide Interbank Financial Telecommunication, known as SWIFT. Last June, the BOE became the first central bank in Europe to establish a currency-swap facility with the People’s Bank of China, supporting yuan traders by providing funding when needed.

London is among cities seeking to lure Chinese investment by becoming centers for trading yuan. Germany’s Bundesbank agreed in March to work with the PBoC on the clearing of yuan payments, with Frankfurt beating Paris and Luxembourg to become the euro area’s first center for trade in the currency.

“We don’t see this as simply being competition, a lot of it is complementary, financial centers work closely together,” Boleat said on Bloomberg Television’s “Countdown” program today.

London is also working to establish itself as a center for Islamic finance with the U.K. set to become the first non-Muslim nation to issue Islamic debt. The U.K. has selected a number of banks led by HSBC Holdings Plc to sell 200 million pounds ($339 million) of five-year sukuk, the U.K. Treasury said in a statement June 12. The road show for the bond, which began today in Jeddah, Saudi Arabia, and Kuala Lumpur, will conclude in London on June 20.

To contact the reporter on this story: Lyubov Pronina in London at lpronina@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Chris Kirkham, Ash Kumar

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.