HSBC announces an RMB first
HSBC Bank plc announces the first international renminbi bond to be launched outside Chinese sovereign territory
18 Apr 2012
On 18 April, HSBC Bank plc launched a benchmark bond issue which signalled a significant step forward in the internationalisation of China's currency (the renminbi or RMB) and in the development of London as an international RMB centre.
The three year RMB-denominated bond, issued by HSBC Bank plc, is the first of its kind to be launched outside Chinese sovereign territory and to be issued from and distributed within Europe and Asia. It is being launched in London and listed on the London Stock Exchange with the aim of tapping the growing pool of RMB liquidity across Europe.
Group Chief Executive, Stuart Gulliver, said: "We are proud to be able to issue this bond. It represents another step in London's development as a premier international trading centre for the renminbi and is an early sign of the huge potential that this market represents."
The internationalisation of the RMB is simply too important to ignore. Developing the offshore market is the route by which the RMB can evolve into a major global trading, financing and investment currency, and eventually a global reserve currency. HSBC expects the international RMB bond market to reach RMB1 trillion within 3 years as the demand for RMB-denominated assets continues to grow. As they become more involved in offshore and cross-border RMB activity, RMB users in Europe will increasingly demand local liquidity in their own time zone.
London, with its leading role in global FX markets and its position as the preeminent global treasury centre, stands to play an important part in the growth of this market. HSBC's bond issue on the morning of 18 April coincided with the creation of a new initiative to develop London as an international RMB hub. The initiative, organised by the City of London, brings together representatives from five major banks, including HSBC, and is supported by HM Treasury, the Bank of England and the Financial Services Authority. Its aim is to deliver a strategy for London to become a centre for RMB products and services, complementing Hong Kong, and seizing some of the significant opportunities which this new market represents.
HSBC is the market leader in RMB products. We were the first foreign bank to settle cross-border RMB trade in all six continents, we have led 87% of all European RMB issuance since 2011 and we have recorded a long list of firsts in the RMB market in Hong Kong. This bond issue will serve to increase our capacity to fund RMB assets in London, while further contributing to the growth of the European RMB investor base and London's potential as an international RMB centre.