Renminbi-clearing taken seriously
Now that the Toronto branch of the Industrial and Commercial Bank of China Ltd (ICBK) is the clearing bank for the first North American offshore renminbi hub, the next goal is improving services.
“Since the announcement was made (in November), we have been working on how to do it well,” said William Zhu, ICBK’s president and chief executive officer. “There are already quite a few renminbi offshore centers in cities like London, Luxembourg, Frankfurt, Paris and Singapore, and as the first renminbi-trading hub in North America, we are eager to create something different here.”
ICBK entered the Canadian market in 2010 and now has eight branches across the country.
“With the valuable opportunity to serve as the only renminbi offshore center in North America, we are confident that we can develop better in Canada, and eventually be recognized as a major player by our customers and other players in the banking industry,” Zhu said.
Zhu believes that as China’s economic power continues to grow, and Chinese companies increase commercial ventures overseas, the demand for strong banking services will grow.
ICBK, as the Canadian subsidiary of the world’s biggest bank ICBC, has the ability to facilitate cross-border trade and investments that are settled in renminbi.
China and Canada have seen rapidly growing trade volume with each other in recent years. As Canada’s second-largest trading partner, China contributed C$73.2 billion to Canada’s total trade in 2013.
With the renminbi’s internationalization in full swing, settling payments directly in the currency will increase the efficiency of bilateral trade between China and Canada.
“In order for renminbi to become an international currency, it needs to gain wide recognition in markets all over the world,” Zhu pointed out, “and North America is a market with great influence among all.”
Another positive factor, according to Zhu, is that the financial market in Canada is well established and regulated.
“The well-developed regulatory system, proper institutional structure, sufficient liquidity and large number of professionals could help us better interact with customers and provide services,” Zhu said.
With the experience of issuing dual-currency (renminbi and Canadian dollars) credit cards together with UnionPay, and cooperating with the British Columbia provincial government in issuing a RMB 2.5-billion dim-sum bond in 2013, the establishment of the first North American renminbi clearing hub will give ICBK the opportunity to further enhance its cross-border RMB capacity.
“Though we don’t own a large market share in Canada yet, I’m confident that our bank has the potential to make progress and enhance market presence – we are dedicated to playing an active role in bilateral trade between China and Canada,” Zhu said.
William Zhu, ICBK’s president and chief executive officer