Malaysia's AmBank has unveiled its renminbi trade settlement pilot programme (RTSPP) facility that will enable the bank's customers to settle their cross-border trade transactions with certain entities on China's mainland in its local currency.

Previously, such transactions had to be settled in US dollars rather than the Chinese currency.

L/Cs and guarantees

"With this facility, we expect our trade business to grow by 30% for the coming financial year ending March 2011," AmBank's group managing director Cheah Tek Kuang said.

He said the range of products in the RTSPP included issuance and payment of letters of credit (L/Cs), advising and confirming export L/Cs as well as issuance of bank guarantees.

Eligible entities

In a 5 May statement, the bank said that under RTSPP, 432 eligible entities on the mainland were now registered with the People's Bank of China to engage in cross-border trade transactions in the Chinese currency.

The entities are located in Shanghai, Guangzhou, Dongguan, Zhuhai and Shenzen.

Growing trend

AmBank joins several Malaysian banks that have been working on introducing the RTSPP over recent months.

One of the first of these was OCBC Bank of Malaysia. It said last September that it would be offering corporate customers the opportunity to settle trade transactions, including L/Cs, under the RTSPP. (DC World News, 15 September 2009)

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