China Ever­bright joins ri­vals in Lux­em­bourg

China Daily (Hong Kong) - - BUSINESS - By CECILY LIU in Lon­don cecily.liu@mail.chi­nadai­

China Ever­bright Bank will re­lo­cate its Euro­pean busi­ness to Lux­em­bourg af­ter the United King­dom leaves the Euro­pean Union, which could be as early as 2019.

The bank an­nounced last week it had re­ceived ap­proval from reg­u­la­tors in the tiny grand duchy to set up an of­fice as it puts to­gether con­tin­gency plans in the wake of Brexit.

Last year, in a ref­er­en­dum, the UK elec­torate voted nar­rowly to with­draw from the EU af­ter more than 40 years in­side the trad­ing bloc.

“The de­ci­sion by China Ever­bright Bank’s (to) move to Lux­em­bourg fits into the trend of Chi­nese banks try­ing to ex­pand into Euro­pean mar­kets to negate po­ten­tial Brex­itre­lated risks,” said Li Chen­grong, a part­ner at Zhong Lun Law Firm in Lon­don.

The UK cur­rently en­joys “pass­port­ing” rights, which al­lows the city of Lon­don and the rest of the fi­nan­cial in­dus­try in the coun­try, to con­duct busi­ness in the other 27 EU na­tions.

But when the UK leaves the trad­ing bloc, it is likely to lose its “pass­port­ing” rights.

“Un­cer­tain­ties with that have prompted many Chi­nese banks to con­sider open­ing or ex­pand­ing of­fices in­side EU coun­tries, so they can con­tinue to sell their prod­ucts.

“Lux­em­bourg, Dublin, Frank­furt and Paris are all vi­able choices,” Li added.

China Ever­bright Bank is fol­low­ing six other Chi­nese lenders that have moved to Lux­em­bourg.

They are Agri­cul­tural Bank of China, Bank of China, Bank of Com­mu­ni­ca­tions, China Con­struc­tion Bank, China Mer­chants Bank, and In­dus­trial and Com­mer­cial Bank of China.

Apart from China Ever­bright, Shang­hai Pudong Devel­op­ment Bank has also made an ap­pli­ca­tion to open a sub­sidiary in Lux­em­bourg.

Its ap­pli­ca­tion is still await­ing ap­proval from Chi­nese and Lux­em­bourg reg­u­la­tors.

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