China’s second-biggest lender is pressing UK regulators for approval to set up a branch in London as part of a drive to expand its international business.
China Construction Bank – nominated this week as the official clearing bank for renminbi trading in London – approached the Bank of England about establishing a branch in 2012. Wang Hongzhang, the bank’s chairman, said it was now working with regulators to win a branch licence as soon as possible.
Operating as a branch, rather than a subsidiary, would allow CCB London to offer services on a much bigger scale, backed by its parent’s capital and liquidity. That would allow it to expand in syndicated lending, advisory services for infrastructure projects and M&A, and enter asset management, Mr Wang said.
UK regulators, wary of importing banking crises, have been reluctant to grant licences that would allow institutions to run extensive operations without coming under an equivalent regulatory regime.
George Osborne, chancellor, has been courting the Chinese as he attempts to build up the City of London’s renminbi business. On a trip to Beijing last October he said the Bank of England had given approval for Chinese banks to be able to establish wholesale branches in the UK, which would provide services to other large institutions, allowing them to “significantly scale up their activity” in Britain.
However, a condition will be that they focus on wholesale banking, rather than economically sensitive retail services.
China and the UK have subsequently been in discussions over the detailed terms under which banks from Beijing would be allowed to open branches in London.
In February, the Prudential Regulation Authority set out its approach as the authorities attempt to strike a balance between welcoming foreign finance and protecting the UK from financial instability.
The PRA made it clear regulators do not want branches of banks from outside the European Economic Area offering anything other than minimal retail business without a “very high level of assurance” about their country’s crisis-management plans.
CCB currently operates in the UK on a subsidiary basis, but the bank has outlined ambitious plans to expand overseas. Mr Wang said while CCB’s international operations had previously tended to support Chinese companies, it would in future focus on winning business from local enterprises. It aims to build a network of 30 international operations across developed and emerging markets by the end of 2015.
Mr Wang flattered his hosts, saying CCB would be a “little brother” seeking to learn from its peers in the City, but that it could support London’s position as a foreign exchange trading hub by promoting offshore trade in the renminbi.
He hinted that growth in renminbi business would now depend in large part on the extent to which China opens access to its onshore capital markets.
Mr Osborne welcomed the nomination of CCB as a boost for London’s bid to become the main western renminbi trading hub.
However, Beijing has balanced CCB’s designation with the nomination, just two days later, of Bank of China as the renminbi clearing bank in Frankfurt.
本周被正式指定为伦敦人民币业务清算行的中国建设银行(CCB)，曾在2012年就建立分行事宜接洽英国央行(Bank of England)。建行董事长王洪章表示，该行现在正与监管机构合作，争取尽快获得分行执照。
今年2月，英国央行下属的审慎监管局（Prudential Regulation Authority，简称PRA）阐明了立场。该局试图在欢迎外国金融机构和保护英国不受金融动荡影响之间取得平衡。
然而，北京方面已对授权建行之举作出平衡，仅在两天后就指定中国银行(Bank of China)为法兰克福的人民币清算行。