Offshore renminbi market targets UK

Standard Chartered has issued Rmb1bn worth of commercial paper out of London in the past four weeks, as it tries to encourage the development of an offshore renminbi market in the UK.

The bank revealed the details on Tuesday as the UK Treasury met with the Hong Kong Monetary Authority and a working group of seven banks in Hong Kong to discuss the standards and products that will promote the market’s development.

StanChart said its three-to-six month commercial paper programme filled the gap between longer term bonds and short term deposits in the offshore renminbi funding market, and was another small step in the creation of a pool of renminbi liquidity in London.

StanChart said it sold the commercial paper to Middle Eastern sovereign wealth funds and European pension funds.

Commercial paper is typically used to finance trade and receivables. Ben Hung, chief executive of StanChart in Hong Kong, said the bank was encouraging its European customers to use the renminbi rather than the dollar for their trade with China.

StanChart estimates that by the first quarter of this year about 11 per cent of all trade with China was being settled in renminbi. However, only about a tenth of that was accounted for by trade between China and Europe, Mr Hung said. The vast majority was still trade between China and Hong Kong.

(more of the article)