18.04.2012
By Simon Miller
HSBC has announced the first international renminbi bond to be launched outside Chinese sovereign territory.
The three year RMB-denominated bond is the first of its kind to be issued outside of mainland China or Hong Kong and will be listed on the London Stock Exchange with the aim of tapping the growing pool of liquidity across Europe according to the bank.
Although, the RMB200m (£20m)aiming to be raised was a relatively small amount, HSBC added that the internationalisation of the RMB was simply too important to ignore and that developing the offshore market was the route by which the RMB could evolve into a major global trading, financing and investment currency, and eventually a global reserve currency.
Group chief executive, Stuart Gulliver, said: "We are proud to be able to issue this bond. It represents another step in London's development as a premier international trading centre for the renminbi and is an early sign of the huge potential that this market represents."
According to figures from the City of London Corporation, customer and interbank yuan or renminbi deposits were worth more than 109bn yuan in London at the end of 2011 and HSBC expects the international RMB bond market to reach RMB1trn within three years as the demand for RMB-denominated assets continues to grow.
London represents 26% of the global offshore spot foreign exchange market in renminbi and HSBC is working with the City and other. The city is working with four major banks and the government to boost London as an off-shore yuan trading centre, building on an initiative by Britain and Hong Kong to co-operate on off-shore yuan trading.
After the announcement, the Chancellor of the Exchequer George Osborne commented: “Let me be clear: London is not in competition with Hong Kong, it is a complement, providing a Western hub for renminbi business.
"This is a significant moment and builds on the progress London has already made toward becoming the western hub for RMB."
Other stories you may find of interest:
A very British Complex
Greater complexity leads to greater risks for banks according to Professor Simon Collinson, Warwick Business School and the Simplicity Partnership
Impacting on investment
With emerging markets looking for investment, Simon Miller looks at the rise of impact investment and what risks entails in this socially aware vehicle
Journey’s end for Solvency II?
Solvency II, the long-mooted new capital adequacy regime for Europe’s insurers, is nearing implementation. Graham Buck reviews its progress
