Subject: Banks back switch to renminbi for trade - FT
From: "Michael Andrews" <[email-masked]>
To: "Thad Brown" <[email-masked]>, "Ronnie Mainieri" <[email-masked]>, "Curt Hastings" <[email-masked]>, "Hunter Biden" <[email-masked]>, "Eric Schwerin" <[email-masked]>, "Neil Callahan" <[email-masked]>, "Chris Heinz" <[email-masked]>, "Devon Archer" <[email-masked]>
Date: Fri, 27 Aug 2010 10:07:09 -0400

It is still a small portion of corporate transactions and there are  
likely multiple layers of political risk - inside and outside of China.

Banks back switch to renminbi for trade
By Robert Cookson in Hong Kong
Published: August 26 2010 17:55 | Last updated: August 26 2010 17:55
A number of the world’s biggest banks have launched international  
roadshows promoting the use of the renminbi to corporate customers  
instead of the dollar for trade deals with China.

HSBC, which recently moved its chief executive from London to Hong  
Kong, andStandard Chartered, are offering discounted transaction fees  
and other financial incentives to companies that choose to settle  
trade in the Chinese currency.

EDITOR’S CHOICE
Editorial Comment: Renminbi goes global - Aug-26

David Pilling: Long march to convertibility - Aug-25

Opinion: Great dangers of great powers - Aug-20

Lex: McDonald’s renminbi bonds - Aug-20

Beijing looks to broaden renminbi use - Aug-17

Opinion: Watch China’s coasts, not its currency - Aug-10

“We’re now capable of doing renminbi settlement in many parts of the  
world,” said Chris Lewis, HSBC’s head of trade for greater China. “All  
the other major international banks are frantically trying to do the  
same thing.”

HSBC and StanChart are among a slew of global banks – including  
Citigroup andJPMorgan – holding roadshows across Asia, Europe and the  
US to promote the renminbi to companies.

The move aligns the banks favourably withBeijing’s policy priorities  
and positions them to profit from what is expected to be a rapidly  
growing line of business in the future.

The phenomenon will accelerate Beijing’s drive to transform the  
renminbi from a domestic currency into a global medium of exchange  
like the dollar and euro.

Chinese central bank officials accompanied StanChart bankers on a  
roadshow to Korea and Japan in June. The bank held similar events in  
London, Frankfurt and Paris.

Lisa Robins, JPMorgan’s head of treasury and securities services for  
China, said there had been a “spike in interest” from international  
clients.

An increasing number of Chinese companies have been asking foreign  
trading partners to accept renminbi as payment, said Carmen Ling, Hong  
Kong head of global transaction services at Citi.

BBVA, Spain’s second-biggest bank, is also drawing up plans for a  
global marketing campaign that will focus on Latin American companies  
that export to China.

Banks started establishing renminbi trade settlement operations in  
mid-2009, when Beijing introduced a pilot scheme allowing companies to  
use the renminbi for trade outside China.

The scramble has intensified in recent months as Beijing has  
substantially expanded the scheme – from a handful of Asian countries  
to the whole world – and introduced other liberalisations to its  
currency regime.

Cross-border trade in renminbi totalled Rmb70.6bn ($10bn) in the first  
half of the year – about 20 times the Rmb3.6bn recorded in the second  
half of 2009.

But those figures remain tiny compared to the $2,800bn worth of goods  
and services that were traded across China’s borders last year, most  
of which was settled in dollars or euros.

With renminbi trade settlement volumes expected to increase rapidly,  
banks are under pressure to establish a foothold in the nascent market  
and demonstrate to Chinese officials that they are committed to the  
scheme.

China has taken several steps in recent months to boost the  
international use of its currency and to establish Hong Kong, the  
special administrative region, as the global centre for offshore  
renminbi business.

McDonald’s, the US burger chain and icon of globalisation, took  
advantage of the new rules this month when it became the first foreign  
multinational to issue renminbi-denominated bonds in Hong Kong.