The internationalisation of the RMB, Zhang Yi, ICBC


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The internationalisation of the RMB, Zhang Yi, ICBC

  1. 1. June. 2014 Development of Cross-border RMB Business The Internationalization of the RMB
  2. 2. Table of Contents 1. Introduction of ICBC and ICBC Singapore Branch 2. The RMB Internationalization 3. Services of the RMB clearing bank 4. Why partner ICBC
  3. 3. 1. Introduction of ICBC and ICBC Singapore Branch
  4. 4. Strictly Confidential 5 ICBC is considered one of the best banks in the world The largest bank in terms of deposit The most profitable bank in terms of net income Sources: Bloomberg, Global Bank Ranking No.1 The largest bank in terms of market cap Global Finance “Best Integrated Corporate Bank Site-Global” “Best Integrated Corporate Bank Site In Asia” “Best Bank in China” “Best Trade Finance Bank in China” Finance Asia “Best Bank in China” “Best Investor Relations” “Best Cash Management Bank” The Asset “Platinum Award for ALL-Round Excellence” “No.1 China’s Most Promising Companies (Banking & Finance)” The No.1 The Global BankThe Best in Class No.1 No.1 US$ bn US$ bn US$ tn As of 31/3/2013 As of 31/12/2012 LTM 31/12/2012 Securities Times “Best Investment Bank (China)” ICBC is the World’s Largest and Most Profitable Bank
  5. 5. Strictly Confidential 6  Over 17,613 branches in China  383 overseas branches in 39 countries and regions around the world  Connection with over 1,771 foreign banks in over 138 countries and regions  Over 4.38 million corporate customers and approximately 393 million retail customers across the world  Solid client base established through continuous business expansion globally  Became the single largest shareholder of Standard Bank, the largest bank in South of Africa - the most significant overseas investment  Established presence in Sydney, New York, Middle East, Doha  Acquired Seng Heng Bank, Macau 1992,1995  London - the first presence in Europe  Established ICBC-BEA Finance Holding Co. Ltd 1998  Acquired Union bank and subsequently renamed to ICBC (Asia)  Listed in Shanghai and Hong Kong  Signed Strategic Investment and Cooperation Agreement with Goldman Sachs, Allianz Group and American Express 2006  Entered Indonesia through acquiring 90% of Halim Bank  Established ICBC (Moscow) 20072000  Acquired Bank of East Asia (Canada)  Acquired Thailand’s ACL Bank PCL  Opened branches in Macau, Hanoi, Abu Dhabi  Established ICBC (Malaysia)  Setting up a Brazilian branch 20092008  Singapore - the very first footprint abroad Accelerated since 2008 Growing Global Presence Extensive global network Accelerated pace of international expansion  Officially renamed ACL Bank PCL as ICBC (Thai) PCL  Extending the tier-2 network overseas including the Red Market Branch of ICBC Macau, Deli Branch of ICBC Korea Branch, South District Branch in Jakarta of ICBC Indonesia 2010 TokyoSeoul Busan Vancouver Toronto New York Macau Hong Kong Jakarta Kuala LumpurSingapore Standard Bank, Johannesburg Almaty Hanoi MoscowLondon Frankfurt Luxemburg Doha Abu Dhabi Dubai Sydney ACL Bank, Bangkok Islamabad Mumbai Paris Brussels Madrid Amsterdam Milan  Opened branches in Paris, Brussels, Amsterdam, Milan and Madrid  ICBC (Luxemburg) renamed as ICBC (Europe)  Announced acquisition of Standard Bank Argentina 2011 2012  Opened branches in Warsaw and Barcelona  Increased stake in Standard Bank Argentina to 80%  ICBC Peru Branch was officially established  ICBC purchased The Bank of East Asia (USA), and named it ICBC America 2013  ICBC was approved to be a RMB Clearing Bank in Singapore  ICBC Brazil was set up  Acquires 20% stake in Taiwan’s Bank Sinopac Argentina Sao Paulo
  6. 6. Strictly Confidential 7  ICBC Singapore Branch was established in November 1993, the first overseas branch of ICBC.  Awarded Qualifying Full Bank (QFB) licence in October 2012 .  The first offshore RMB Clearing Bank outside Greater China,designated by the People's Bank of China on Feb 8 2013 .  Issued 2 billion yuan (328 million US dollars) "Lion City" bonds, representing the biggest RMB-denominated bond issue so far in the Singapore market in Nov 2013.  Carried out the first FTZ RMB two-way cross-border cash pooling in Dec 2013 (100 million yuan for Bao Steel).  On 20 Feb 2014, Provided Rmb100m and Rmb70m, respectively, to Sinopharm Holding Distribution and Shanghai Baosteel Pudong International Trade – the first cross-border RMB financing between Singapore and Shanghai FTZ. Transactions were remitted through the same day via RMB Clearing Bank even though CNAP closes at 5pm.  By the end of June 2014, the total clearing amount exceeded 17 trillion yuan, and the peak daily clearing value reached nearly 300 billion yuan.  To date 77 Participating Banks all over the world have opened RMB accounts with the Clearing Bank and more are in the pipeline. ICBC Singapore Branch: History &Timeline
  7. 7. Strictly Confidential 8 2. The RMB Internationalization
  8. 8. Strictly Confidential 9  World’s 2nd largest economy with GDP over US$8 trillion in 2013.  China surpassed US as largest trading nation in the world with trade flow of almost US$4 trillion  Largest foreign reserve holding of more than $3.8 trillion as at end 2013. China’s trade with the world will drive RMB Internationalization
  9. 9. Strictly Confidential 10 RMB overtook 22 currencies in the last 3 years
  10. 10. Strictly Confidential 11 RMB rising in importance as global trade settlement and payment currency Currently China had signed currency swap contracts with 24 countries and regions with the scale of 2.5 trillion RMB. In April 2014, RMB held its position as the seventh-ranked global payments currency and accounted for 1.43% of global payments. In October 2013, RMB became the second most used currency in trade finance, overtaking the Euro.
  11. 11. Strictly Confidential 12 Singapore pips London as RMB clearing center helped by ICBC  Ever since last year's nomination of ICBC as the RMB clearing bank in Singapore, the Singapore RMB payment flows have been accelerating.  According to SWIFT data, the value of Singapore's RMB payments in March rose 375 percent from a year earlier, taking up 6.8 percent of the overall RMB payments. Singapore has surpassed London to rank second globally as a clearing center for RMB.
  12. 12. Strictly Confidential 13 Investment Global ReservesTrade The route of RMB internationalization
  13. 13. Strictly Confidential 14 Beijing - Exporting to China -RMB financing from China - RODI from China -RMB purchase - Currency Swap -Importing from China -RFDI to China -Deposit in Clearing Bank or via Non-Resident account -Investment in China inter-bank bond market - RQFII - Issue offshore bond Flowing out of China Flowing back into China Channel of Cross-border RMB
  14. 14. 3. Services of the RMB clearing bank
  15. 15. Services Provided By Clearing Bank • RMB clearing & settlement • RMB deposits • RMB FX conversion & money market & bond • Intra day liquidity support • RMB banknotes • Collateralized liquidity facilitiest (in progress). ICBC RMB Clearing Bank Services
  16. 16. ICBC SG CNAPS Code: 102100099988 SWIFT Code: ICBKSGSGCLR Receiving Bank ICBC HO Participant ICBC SG ICBC (Asia) UBHKHKHH ICBC group as correspondent bank Banks in China (Non-ICBC) ICBC Group Banks in Hong Kong Banks in the related region MT103/202 CNAPS ICBC GSCP ICBC GSCP SWIFT RTGS Payment Route Book transfer
  17. 17. Clearing Days Singapore 1Mainland China 2Hongkong Whether clearing services provided 1 Business day Business day Business day Yes 2 Public Holiday Business day Business day *Yes 3 Public Holiday Public Holiday Business day *Yes 4 Public Holiday Business day Public Holiday *Yes 5 Public Holiday Public Holiday Public Holiday No 1 No clearing services will be provided for payment to or from mainland China if that day is a public holiday in mainland China. 2 No clearing services will be provided for payment to or from Hong Kong if that day is a public holiday in Hong Kong.
  18. 18. Straight-Through-Processing(STP) Taiwan 0830-2230* 0830-1645 Hong Kong -RTGS China -CNAPS 24h Book Transfer Non Straight-Through-Processing(non-STP) Taiwan 0830-2200* 0830-1630 Hong Kong -RTGS China -CNAPS 0830-2330* Book Transfer Clearing Hours
  19. 19. Value: RMB 100 million Clearing Value & Volume 1066.00 1438.28 2178.90 3837.70 4509.21 5919.49 6932.61 17730.57 24113.17 27394.97 21952.23 24557.53 29667.31 2230 2464 2906 4730 6485 8480 10748 22392 28487 44306 31835 39688 43561 0 10000 20000 30000 40000 50000 60000 70000 0.00 5000.00 10000.00 15000.00 20000.00 25000.00 30000.00 35000.00 40000.00 45000.00 50000.00 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Value Volume Expon. (Value) Expon. (Volume)
  20. 20. Strictly Confidential 21 4. Why partner ICBC
  21. 21. Strictly Confidential 22 Why partner ICBC System capabilities - Centralised clearing platform • Real time information sharing • Automated conversion between CNAPS & SWIFT messages • Automated selection of most efficient payment route • Support 7*24 hours processing for straight through payment • Longest clearing servicing hours for payment to mainland China • Speedy, efficient straight through processing of payments
  22. 22. Strictly Confidential 23 Expertise • Experienced & dedicated RMB clearing operation team based in Head Office working hand in hand with local operation team to ensure high quality service provided to participants. Competitive pricing • World’s Largest Bank in terms of Customer RMB Deposits enables us to offer competitive interest rate on RMB deposit, financing cost & clearing fee thereby reducing participants’ operating costs Why partner ICBC
  23. 23. Strictly Confidential 24 Liquidity provider role PBOC appointed Clearing Bank Collaboration with MAS Dedicated task force Strong liquidity support from Head Office. Strong support from PBOC As RMB Clearing Bank works closely with MAS and industry players to develop the local RMB market. Dedicated task force to focus on ever-emerging regulatory landscape. Why partner ICBC
  24. 24. Thank you!
  25. 25. Disclaimer This document is prepared by Industrial and Commercial Bank of China Limited, Singapore branch. While we take all reasonable care in preparing this document, no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. This document is for information purposes only and it does not constitute any offer, recommendation or solicitation to any person to enter into any transaction with us. The contents of this document are not made with regard to the specific investment objectives, financial situation or the particular needs of any particular person. You are advised to make your own independent judgment with respect to any matter contained herein. Other persons should not rely on this document. This document cannot be reproduced, distributed or published by any person for any purpose without our prior consent. Copyright: Industrial and Commercial Bank of China Limited 2013. Copyright in all materials, text, articles and information contained herein is the property of, and may only be reproduced with permission of Industrial and Commercial Bank of China Limited. Copyright in materials created by third parties and the right under copyright of such parties is hereby acknowledged. Copyright in all other materials not belonging to third parties and copyright in these materials as a compilation vests and shall remain at all times copyright of Industrial and Commercial Bank of China, Singapore branch and should not be reproduced or used except for business purposes on behalf of Industrial and Commercial Bank of China Limited or save with the express prior written consent of Industrial and Commercial Bank of China Limited, Singapore branch. All rights reserved.