Bank of China Ltd. has invited German banks to use its yuan-clearing service and named Deutsche Bank AG as its first client.
“Our doors are open now for German banks,” Bernd Meist, who heads Bank of China’s Frankfurt operations, said at a press conference in the city today after Deutsche Bank announced that it has signed a memorandum of understanding with the Chinese lender. Clearing contracts with other banks are prepared and ready to be approved in the coming weeks, Meist said.
Today’s announcement marks the next step in creating a second European hub for yuan trading after London. Frankfurt, Germany’s financial capital, prevailed over Paris and Luxembourg as the euro-area location earlier this year, joining global financial centers seeking to tap the offshore market.
Europe accounts for 10 percent of global renminbi payments worldwide, according to data by the Society for Worldwide Interbank Financial Telecommunication published today. Payments in yuan more than doubled in the U.K. and Germany in the year through July as the selection of London and Frankfurt as official clearing centers boosted yuan-trading activities, SWIFT said.
“We will work with our partner, the Bank of China, to increase liquidity in yuan between China and Germany,” Lothar Meenen, Deutsche Bank’s head of trade finance and cash-management corporates for Germany, said in a telephone interview today. The new partnership will complement Deutsche Bank’s yuan business, he said.
A third of all cross-border renminbi transactions globally, or more than 8 trillion yuan ($1.3 trillion), is processed by the Bank of China, its president, Chen Siqing, said at a press conference in Frankfurt today.
“The start of the clearing bank in Frankfurt is very important to optimizing the yuan-clearing network of the Bank of China,” Chen said.
The lender was appointed as a clearing bank on June 19. Bank of China holds similar mandates in Hong Kong, Macau and Taipei, while yuan trades in London go through China Construction Bank Corp.