Labuan FSA appoints Bank of China as yuan settlement bank

LABUAN: The Labuan Financial Services Authority (Labuan FSA) has appointed Bank of China (M) Bhd (BOCM) as a yuan settlement bank, bringing efficient, seamless and cost-effective real-time settlement of yuan-denominated transactions to financial institutions and entities.

The appointment is an extension of the BOCM’s yuan settlement service in the Real-time Electronic Transfer of Funds and Settlement System (Rentas) offered in Malaysia since 2012, in collaboration with Rentas operator, Payments Network Malaysia Sdn Bhd (PayNet).

Labuan FSA director-general Danial Mah Abdullah said the appointment was part of efforts to enhance Labuan International Business and Financial Centre’s (Labuan IBFC) financial infrastructure, in line with its role in facilitating financial, trade investments and trade flows in the Asian region.

“This yuan settlement facility will add more depth to Labuan IBFC’s value propositions, which will attract more Asian corporations to establish business in Labuan and use it as the jurisdiction of domicile,” he said at the official appointment ceremony at Dorsett Grand Labuan yesterday.

Meanwhile, PayNet group chief executive officer Peter Schiesser announced that eligible financial institutions in Labuan would be able to participate in Rentas.

“By having access to yuan settle- ment via Rentas, Labuan banks and market participants will have a strong foundation to create a critical mass of foreign currency market activities. I trust the yuan settlement will allow the Malaysian financial system and banks in Labuan to play a larger role in facilitating international economic activity and intermediating international capital flows,” he said.

BOCM deputy chief executive officer Datuk Alvin Tay said yuan had become one of the major global currencies in terms of investment and reserve management.

He added that China’s capital markets were opening up, increasing investment opportunities among international investors looking into expanding in potential emerging markets.

As of June, the Swift data showed yuan holding fifth place among currencies for global payments with a market share of 1.8%, overtaking 14 currencies in the past five years.

“As a yuan market leader in Malaysia, BOCM has contributed in building the backbone of the yuan clearing and settlement model in Malaysia with the strong support from Bank Negara and PayNet since 2009.

“BOCM’s appointment by Labuan FSA will further strengthen and complement BOCM’s existing yuan business model for Malaysia and the cross-border coverage in the Asean region,” he added. — Bernama