Westpac Banking Corporation (Westpac) has been named a foundational bank to Australasia’s first renminbi hub in Sydney following its approval by the People’s Bank of China and the Reserve Bank of Australia in Canberra.

 

Westpac Group CEO Gail Kelly noted the significance of this milestone, saying that alongside a Free Trade Agreement with China, this would support the development of closer economic ties with China and play to Australia’s strength in financial services.

 

“As one of the first banks to connect with the renminbi hub in Sydney, Westpac is supporting the internationalization pathway of the Chinese currency across the region. The ability to settle transactions in renminbi in real time through Sydney will make it faster and easier for customers to trade and transact in renminbi.  As a result of this development, the currency can move freely throughout our region to open up more of China’s economic opportunities for our customers across Asia, Australia and New Zealand,” she said.

 

China is the number one trading nation in the world, and is already Australia’s largest export market, accounting for A$102 billion, or more than a third of all Australian exports in 2013. The renminbi is the second most used currency in trade finance, but at present very few Australian businesses actually invoice and settle trades in renminbi.

 

“We anticipate that we will see more financial activity in renminbi as liquidity increases and the market embraces the benefits of dealing directly with a clearing bank in Sydney,” said Rob Whitfield, chief executive, Westpac Institutional Bank.

 

“We are reaching a tipping point as customers across Asia, New Zealand and Australia are increasingly seeking more renminbi products and services. We are responding to this demand and have built a comprehensive offering to support the expected growth in trade and payments settled directly in this currency.

 

“The benefits are more profound than trade alone. A renminbi hub in Sydney will encourage a build-up of Australian-based renminbi deposits, deliver larger pools of liquidity and stimulate market activity in renminbi-denominated financial products,” he said.