SGX, Bank of China sign pact to develop RMB products and services

PHOTO: SGX, Bank of China sign pact to develop RMB products and services

SINGAPORE - Under the agreement, both sides will cooperate in developing RMB products and services, as well as to expand business in China and SGX's markets.

Get the full story from The Straits Times.

Here is the press release fron Bank of China

Bank of China (BOC) today launched a major strategic push to promote the renminbi's (RMB) internationalisation at a conference attended by Singapore, Chinese and regional government and financial leaders.

The Chairman of Bank of China, Mr Tian Guoli, said the RMB was on a path to become one of the world's major trading currencies, and that Bank of China's global network is enabling greater RMB access in global markets.

"This year RMB has become one of the world's top 10 most-traded currencies but this is just the beginning of RMB's internationalisation. With interest rate liberalisation in China and accelerating reforms in financial markets aimed at facilitating full convertibility of RMB under capital accounts, RMB possesses great potential for use and growth in the international sphere," Mr Tian said.

"History has proven that the rise of a country's economy and internationalisation of its currency can create a paradigm shift in the global currency system, bringing about a reshuffle in the ranks of global financial centers around the world. Backed by the strength of China's economy, we are very optimistic about the future of RMB as a global currency," he said.

Mr Tian was speaking at a conference organised by Bank of China which sought to highlight the advantages of RMB. This was his first visit to Singapore since his appointment in May 2013. The event was attended by more than 200 top officials from governments and businesses from Singapore, China and the region, including the Monetary Authority of Singapore (MAS) Assistant Managing Director, Mr Leong Sing Chiong, Chinese Ambassador to Singapore, Mr. Duan Jielong, Singapore Exchange (SGX) CEO, Mr. Magnus Böcker and IE Singapore CEO, Mr Teo Eng Cheong.

At the event, BOC launched the BOC Cross-border Renminbi Index (CRI) and signed two Memorandums of Understanding with the Singapore Exchange and global commodity trader, Trafigura Pte Ltd.

"In 2012, China's international trade numbers contributed to 11.1 per cent and 9.8 per cent of global export and import volumes respectively, making China the largest exporter and second largest importer that year. However, the RMB only accounts for 0.87 per cent of the total amount of global trade settlement in the same year. The RMB was once been dubbed the 'Dormant Currency'. Now it has awoken, the RMB is increasingly exhibiting its potential," Mr Tian said.

BOC has the largest global scale and professional banking capacity regarding RMB cross-border transactions. Since 2009, BOC's cross border RMB transaction volume is the highest among all Chinese banks, and exceeded seven trillion Yuan (S$204 billion). BOC uses an in-house RMB settlement and clearing platform that is fully capable of supporting its global RMB business. As such, BOC is able to build a comprehensive RMB business that covers deposit, loan, settlement, investment and trading products, providing a full range of services to global clients.

"We are very pleased to see that Singapore has emerged as one of the leading offshore RMB trading centers, reflecting great strategic foresight and vision of the Singapore government," Mr Tian added.

BOC has been in Singapore for 77 years and has acquired Qualifying Full Bank License (QFB). It runs commercial banking, investment banking, aviation leasing and Privileged Wealth Management arms locally.

"The RMB market in Singapore has always been of great significance to BOC and we have gone to great lengths to provide customised products and tailored services to our customers. BOC Singapore branch is one of the largest and most efficient players of RMB business in the local RMB settlement market. In the first eight months this year, BOC Singapore branch recorded a total settlement volume of 1.37 trillion RMB. Going forward, BOC will continue to strengthen Singapore's position in BOC's global strategy of RMB business," Mr Tian said.

At the conference, Bank of China launched the BOC Cross-border Renminbi Index. This index was developed based on BOC's insights into the currency transfer process, reflecting RMB's level of activities in cross-border and overseas transactions. The Index provides a practical guide for businesses to use cross-border renminbi products and services. BOC also signed a memorandum of understanding (MOU) with the SGX to cooperate in developing RMB products and services, and expanding business in China and SGX's markets.

This will make BOC the first Chinese settlement bank for SGX.

SGX CEO Mr. Böcker said, "We are delighted to partner Bank of China in growing the markets of the world's second-biggest economy. With this partnership, our customers can benefit from easier access to China and more tools to manage their risks. We look forward to more of such collaborations as we continue to strengthen and enhance SGX as the Asian Gateway."

BOC also signed a MOU with Trafigura Pte Ltd, one of the world's largest commodity companies. Mr Pierre-Yves Rigaux, CFO, Asia Pacific for Trafigura Pte Ltd welcomed the opportunity to form a long-term strategic partnership with BOC. "We have worked with Bank of China in Singapore for a number of years and have benefited from its comprehensive and efficient commodity financing solutions. As our business develops across Asia Pacific we look forward to working even more closely with Bank of China in the region," Mr Rigaux said.

Chinese Ambassador to Singapore, Mr. Duan Jielong said, "There is strong trade partnership between Singapore and China and rich prospects lie ahead. With the continuous expansion of RMB use in international trade and investment activities, China and Singapore will definitely see new opportunities for collaboration."

In this visit to Singapore, Mr. Tian will also meet with Senior Minister Mr. Goh Chok Tong, Deputy Prime Minister & Minister for Finance, Mr Tharman Shanmugaratnam, Managing Director of the Monetary Authority of Singapore, Mr Ravi Menon and Executive Director & CEO of Temasek Holdings, Ms Ho Ching to exchange views on the world economic situation, the globalisation of RMB, the ongoing construction of RMB offshore market as well as the regulatory compliance issues with regards to the banking industry. In addition, Mr. Tian will attend the Singapore Summit, meeting with more than 300 business leaders, economists and other delegates from over 30 countries.