Which banks succeed in supporting renminbi internationalization?

Several banks have been recognized by The Asset’s board of editors for their efforts in supporting the internationalization of the renminbi

Illustration by Sara Sen
Illustration by Sara Sen

DESPITE the volatility and regulatory setbacks in renminbi internationalization over the past couple of years, the emerging currency remained resilient in 2017. The further integration of China’s onshore markets with the rest of the world was a major theme over the past year.

The Bond Connect, which was introduced last summer, gave offshore investors direct access to the third-largest bond market in the world. 2017 also saw the announcement that MSCI would include China’s A-shares into its emerging market index, a move that is predicted to bring US$500 billion of foreign equity flows into China over the next 5-10 years. More recently, as a sign of the growing trend, Bloomberg announced in March 2018 that they will be including government and policy-bank bonds in the Bloomberg Barclays Global Aggregate Index.

Likewise, issuers continued to dip their toes into the onshore Chinese fixed-income market with the likes of Malaysia’s Maybank and Russia’s Rusal issuing panda bonds in hopes of diversifying their investor base. The proceeds from the Maybank issuance will be used to finance Belt and Road projects. Since those trades, 2018 has kicked off with a number of panda bond issuances, with Mizuho Bank, Bank of Tokyo-Mitsubishi and the Republic of the Philippines each looking to entice onshore Chinese investors.

There is also a growing acceptance of using renminbi as a central bank’s reserve currency with the Deutsche Bundesbank being the latest entity to announce plans to include the Chinese currency into its reserves. Already more than 60 countries have included the renminbi into their foreign exchange reserves including Singapore and Russia.

Even cross-border flows, which were stalled due to Chinese regulatory window guidance, have seen some relaxation. Offshore companies that typically raise renminbi through cross-border renminbi direct loans in Chinese free trade zones can now apply directly to the People’s Bank of China for such approval.

As a result of all these positive developments, several banks have been recognized by The Asset’s board of editors for their efforts in supporting the internationalization of the renminbi, at Treasury, Trade, Supply Chain and Risk Management Awards.

HSBC, as in previous years, continued to execute sound renminbi solutions for their clients, such as foreign exchange hedging or security services. The bank has a wide renminbi servicing network that helps clients as far as Chile. The bank has a particularly strong renminbi business in the UK, guiding investors in accessing the onshore Chinese market. HSBC is recognized as Best renminbi bank in the markets of Canada, Chile, Germany, Malaysia, South Korea, the United Kingdom and the United States.

Standard Chartered also established itself as a top player in the significant renminbi centres of Hong Kong and Singapore. During the review period, the bank’s Hong Kong operations saw significant growth in its renminbi payment volume and the establishment of cross border renminbi cash pools. Standard Chartered also demonstrated the ability to help Hong Kong-based institutional investors gain access to the onshore China market via the Bond Connect. The bank is named Best renminbi bank in the markets of Hong Kong, Singapore and Taiwan.

Local banks were also active in creating renminbi solutions for their clients. In Thailand, Siam Commercial Bank continued to service corporates, and processed a higher number of renminbi trade transactions in 2017 compared to 2016. The bank is awarded Best renminbi bank, Thailand.

China Merchants Bank was an important bank for clients in China. Using blockchain technology the bank was able to handle cross-border renminbi settlement thereby reducing labour and operational resources. The bank allowed for cross-border non-resident account renminbi loans. China Merchants Bank wins Best renminbi bank in China.

For the full list of the Best renminbi banks (by country) please click here.

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