Bank of England names London Chinese currency clearing hub

Yuan being counted The appointment is part of a plan to make London a key offshore Chinese currency clearing centre

Related Stories

The Bank of England has appointed one of China's "big four" banks as the Chinese currency clearing bank in London.

The China Construction Bank will be the London renminbi (RMB) clearing house.

The appointment is part of a plan to make London a hub for Chinese currency dealing.

Chancellor George Osborne said the bank would be "hugely important in underpinning the future growth of London's RMB business".

In March, the Bank of England signed a memorandum of understanding with the People's Bank of China setting out the deal.

The banks have said they want to encourage the cross-border use of renminbi, or yuan, to rebalance the global economy.

Mr Osborne said that "the emergence of China's currency as one of the world's leading currencies will be the next huge change" in the financial world.

The head of China's CCB Bank tells the BBC's Kamal Ahmed the deal is of "critical importance"

In addition to the renminbi clearing agreement, Mr Osborne said that UK Export Finance, the UK's trade finance body, will start to give guarantees for transactions denominated in RMB.

Renminbi and the UK economy

Bank of England governor Mark Carney said the clearing house deal was an "important milestone", because the Chinese bank would "play a valuable role in facilitating greater use of the RMB for trade, investment and other economic activities in the UK".

Standard Life chair Sir Gerry Grimstone said renminbi trading is the most important issue facing the City of London at the moment.

Mr Grimstone, who also chairs financial services trade body TheCityUK, helped broker the memorandum.

He said the deal could help to secure City jobs for decades.

"We're moving down a track very rapidly where London is going to become... the offshore centre for trading renminbi," he told the BBC.

Two-thirds of Chinese currency traded outside of China is already done in London, he added.

On Tuesday, Prime Minister David Cameron announced that trade deals worth more than £14bn had been signed during a state visit by Chinese premier, Li Keqiang.

Mr Li said the yuan clearing house deal "will further consolidate and promote London's status as an international financial hub" and help "promote trade and investment liberalisation and facilitation".

During Mr Li's visit, the London Stock Exchange (LSE) said that it had signed agreements with two of China's biggest banks to develop UK renminbi trading.

The LSE deal with the Bank of China will see the two firms design clearing and financing processes for financial products.

The deal with the Agricultural Bank of China is designed to help ease access to capital for Chinese companies.

Last year, China opened its markets to UK-based investors, letting London-based asset managers invest directly in Chinese stocks and shares in yuan.

A 200bn-yuan currency swap arrangement allows firms to settle trades directly in pounds and yuan rather than through US dollars.

In March, the private-sector arm of the World Bank, the International Finance Corporation, issued a 1bn-yuan bond in London, the first by an international financial institution.

Future deals?

Mr Osborne said that there were a number of ideas discussed with the Chinese delegation during Mr Li's visit, including how to make London an attractive place for Chinese businesses to set up international headquarters.

Direct stock market investment in RMB from Chinese individuals and institutions and was also discussed.

"I now want us to explore ways for Chinese individuals and institutions to invest RMB into London's global capital markets," he said.

The chancellor said he would also like to see the London Stock Exchange directly hooked up to stock exchanges in China.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories


BBC Business Live

    QANTAS 08:03:

    Shares in the Flying Kangaroo are up 7.3% at A$139 in the wake if its hefty loss. "We are focused now in the short to medium term on the transformation program," said chief executive Alan Joyce. "We are not actively out there looking for an airline investor." Investors are actively buying its shares though - a new law is opening the doors to foreign investment in the international arm of the airline.

    AA logo

    There seems to be some upheaval at the top of the AA. Its chief executive Chris Jansen is resigning immediately. The chief financial officer Andy Boland is leaving too.

    ICE SALES 07:39: Radio 5 live
    Alex Brown of Exeter Chiefs takes part in the Ice Bucket Challenge

    The charity ice bucket challenge appears to be boosting the sale of ice cubes. Tesco says they're up 20%. Paul Doughty, managing director of The Ice Company told Wake up to Money his firm had been busy restocking supermarkets - which saw big sales last weekend. But he explained that this was a bit of a challenge. "At this time of year, we are actually ramping down production, sales get run down over the summer, and we start to reduce our staffing levels in our factories through August."

    LIVING WAGE 07:31:

    What is is? It is set at £8.80 an hour for London and £7.65 for the rest of the UK. Find out here. The minimum wage - the government's base line, is £6.31.

    PADDY POWER 07:26:
    Paddy Power pic from website

    Betting giant Paddy Power says pre-tax profits are down 13% at £62m for the first half of the year. The company says many football punters had "dream weekends" in January and March, with 16 and then 17 teams of the 21 most backed winning. "This proved costlier than John Cleese's divorce", says Paddy.

    HAYS RESULTS 07:16:

    Profits have risen at the recruitment business Hays, which operates in 33 countries. Profits rose 12% in the past year to £132m. Dividends are up 5%. "In many of our global markets, the vast majority of professional and skilled recruitment is still done in-house, with minimal outsourcing to recruitment agencies which presents substantial long-term structural growth opportunities," the company said.

    LIVING WAGE 07:05: BBC Radio 4

    On the TUC Living Wage story: TUC general secretary Frances O'Grady tells Today that women come off worse because there is low value attached to the jobs women tend to do, such as care working and shop work.

    LIVING WAGE 06:53: BBC Radio 4
    Care worker

    Today is discussing the Living Wage concept. In many parts of Britain, women working part-time earn less than the Living Wage, says the TUC. Three quarters of part-time women workers in Lancashire do, as do two thirds of part-time women workers in West Somerset. TUC chief Frances O'Grady explains: "The minimum wage is an absolute floor, the Living Wage is the level that means you can take your children on holiday for a week - nothing fancy." The minimum wage is £6.31.

    QANTAS 06:42:

    Can Qantas solve its huge financial problems? The BBC's Phil Mercer in Sydney says: "The airline's annual accounts have become a horror story of decline as it tries to chart a path back to profit and sustainability". Read more.

    MALAYSIA AIRLINES 06:32: BBC Radio 4

    Can an airline survive two major plane disasters in a single year? Today says that's the question for Malaysia Airlines. Those who have flown on the airline recently report near empty cabins. Can Malaysian Airlines survive? David Learmount from Flightglobal thinks so. "Malaysia will be given a chance by the government and it will be given some money. People don't like seeing airlines go bust," he told Today listeners.

    BUSINESS LENDING 06:22: Radio 5 live

    Wake Up to Money looks forward to later this morning when the Bank of England will give us an update on its Funding for Lending scheme - introduced two years ago to encourage banks to lend to small businesses. It's not been a rip-roaring success: a previous report said, despite all that help, the amount of money being lent was down £2.7bn over the first three months of this year.

    QANTAS 06:12:
    A Qantas Airline plane gets takes off at Sydney Airport in Sydney on August 28, 2014

    Overnight Australia's national airline Qantas reported a huge loss of A$2.8bn for the past year - its biggest ever. That was partly due to writing down the value of its planes by A$2.6bn. Qantas added weak domestic demand, poor consumer spending and rising fuel costs also contributed. Chief executive Alan Joyce tried to put some gloss on the figures: "There is no doubt today's numbers are confronting... but they represent the year that is past".


    Pro-independence business people in Scotland have hit back. 200 of them have signed a letter, appearing in the Herald online, saying that the business case for independence "has been made - and it's strong and ambitious". They add: "The real threat to Scotland is the real possibility of a British exit from the European common market".

    Rebecca Marston Business reporter, BBC News

    The monitor has been fitted and off we go. You can plug in to us or @bbcbusiness. Here until 13:00.

    06:00: Ian Pollock Business reporter, BBC News

    Good morning, the Business Live page will have its finger on the business pulse, just for you.



From BBC Capital


  • Going through ice across the Northwest PassageThe Travel Show Watch

    Navigating the treacherous Northwest Passage through ice and Arctic storms

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.