StanChart eyes London yuan market share
London, December 3, 2013
Standard Chartered Bank plans to offer preferential interest rates and waive clearing fees as part of its strategy to win market share for the growing yuan business in London.
StanChart said on Monday it will cooperate with Agricultural Bank of China (ABC) to provide yuan clearing services in the UK, helping financial institutions and corporates execute yuan transactions.
"We think London is the place where the RMB will develop in the West, just given the depth of London's capabilities," said Peter Sands, Standard Chartered Bank's chief executive officer during a visit to Beijing.
"The missing part of the equation has been clearing services. As of yesterday we are offering clearing services. It's a good example of a Chinese and a UK institution working together."
London has taken big strides in the offshore yuan business in recent months, particularly in the foreign exchange trading business with daily volumes settled at nearly $3 billion and trade-related financing activities also seeing strong growth.
That has led to establishing closer trade ties between London and Beijing in the form of signing a currency swap line in June and organizing road shows to promote yuan business.
Deposits in London-based institutions have declined slightly with the total level of deposits in retail current, savings and time deposit accounts at 220 million yuan ($36.11 million) while deposits in private banking accounts totaled 2.8 billion yuan at the end of 2012, according to a June 2013 City of London report.
In comparison, offshore yuan deposits with Hong Kong banks rose by their biggest margin since April 2011 in the month of October to 782 billion yuan, the latest data from the Hong Kong Monetary Authority, the city's de-facto central bank showed. CHART: r.reuters.com/geh67t
While StanChart declined to disclose the amount of deposits the bank has, it said deposits were growing rapidly across all the offshore centers and said it will offer a preferential deposit rate of 1.08 percent for deposits over 100 million yuan and 88 basis points below that.
In Hong Kong, the comparable deposit rate offered by Bank of China Hong Kong to banks for clearing related business is about 0.6 percent, though retail and interbank deposit rates are far higher and vary from bank to bank
"We have a double-digit market share in Hong Kong, and we have also rapid growth of deposits in Taiwan and Singapore," said Sands.
Standard Chartered is looking to expand its partnership with ABC, said Sands.
In 2010, Standard Chartered forked out $500 million for a stake in ABC ahead of the Beijing-based lender's initial share sale. That cooperation will focus on smaller companies. "The SME sector is crucial," he said.
Sands refused to discuss the extent to which China's slowing economy has impacted Standard Chartered's business throughout the region, but said he wasn't discouraged.
"I actually think growing at 7 or 7.5 per cent in a sustainable way is better than growing faster in a less sustainable way," he said.-Reuters