China Construction Bank (CCB) (601939.SS), China's second-largest lender, has been selected to become the first clearing service for renminbi trading in London, the Financial Times reported, citing people close to the decision.
The clearing bank will help secure London's position as a global center for foreign exchange trading, as financial capitals around the world race to secure a slice of the fast-growing offshore yuan trade.
The paper said Chinese Premier Li Keqiang was expected to announce the deal when he visits London next week for an annual summit, a reciprocal visit following a trip by Britain's prime minister to China last year. (link.reuters.com/sep99v)
CCB was selected despite initial expectations that local rival Bank of China was the likely choice, the FT's sources said, adding that the decision had been made in Beijing, not London.
The Treasury declined to comment.
Britain and China signed an agreement last month to set the service up, days after Germany clinched a similar deal. China is a focus of the British government as it tries to boost the country's exports, including those from its powerful financial services industry.
Hong Kong is by far the largest center for offshore yuan deposits, according to consultancy PwC. Deposits in Taiwan, Singapore and Macau also dwarf those in Luxembourg, Paris or London. New York lags far behind Europe.
Britain's hope is that a London clearing bank would complement the main clearing infrastructure in Hong Kong, easing the transfer of funds in the western time zone.