video Finance Videos

China set to choose yuan clearing bank for UAE

Wednesday, August 10, 2016 - 02:10

China's main state-owned lenders are becoming increasingly involved in major financing deals in the MIddle East. As Nawied Jabarkhyl reports, in recent months low oil prices have put a strain on finances for both governments and businesses in the region.

▲ Hide Transcript

▶ View Transcript

Dubai International Financial Centre... this is the Middle East's banking hub... where Chinese banks are witnessing impressive growth. The big-four state owned ones have all set up shop here in recent years... including ICBC, Bank of China... and ABC. By February... the four lenders made up around a quarter of all assets booked at DIFC... a total of $21.5 billion. (SOUNDBITE) (English): Thomas Streater, Head of Investment Research, AWAAM Consulting, saying: "Commercial hubs in the Middle East are basically all important players in one belt, one road, so the Chinese banks need to be here to help finance that trade." The rise of Chinese banks... has coincided with a plunge in oil prices. The fall in petrodollars since late 2014... has forced governments and companies here to tighten their belts... and look for new sources of financing... which Chinese banks have looked to profit from. (SOUNDBITE) (English): Zhou Xiaodong, General Manager, ICBC Dubai, SAYING: "I am looking for opportunities, not only in this industry but we also like to diversify our products and our clients in this region." In June, ICBC gave $1.5 billion to Saudi- Electricity Company... in one of the largest loans ever given by a Chinese bank in the Gulf. Aside from offering debt… bilateral trade is increasingly being done in the Chinese currency. In April 2015, a yuan clearing centre was set up in Qatar… with a second one set to open in the UAE in the coming months… (SOUNDBITE) (English): Min Fang, Senior Executive Officer, ABC Dubai, SAYING: "Hopefully by the end of this year a Chinese bank will be announced by the Chinese central bank as the designated current bank for the UAE." Business between China and Gulf countries is booming... with a free-trade agreement currently in the works. A move that could pave the way for China's economic dominance in the region.