Agricultural Bank of China (ABC) and Standard Chartered Bank have said they will become the first banks to offer renminbi (RMB) clearing services in the UK.

The move is expected to underpin the fast growing popularity of RMB denominated L/Cs in international trade.

Positioning London

The two banks signed a memorandum of understanding on 2 December 2013 under which financial institutions and corporates can work with Standard Chartered and ABC to execute RMB transactions.

The new clearing services in the UK are expected to strengthen London's position as a leading offshore RMB centre.

L/C growth

Clearing of RMB transactions in the UK is currently executed via a real time gross settlement system in Hong Kong through clearing banks in Taiwan and Singapore or through agent banks in China.

The move by ABC and Standard Chartered is expected to involve more RMB L/C business materialising in the UK.

The volume of L/Cs and other loan guarantees grew 13 times to 4.7 billion yuan in 2012 compared with 2011, according to a report released by the City of London in June 2013.

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