HSBC Middle East has completed its fi rst crossborder renminbi (RMB) trade transaction, becoming the fi rst bank to announce such a transaction in the region.
HSBC worked with Royal Palace Furniture, a UAE based retailer, to complete an RMB transaction with its suppliers in China. With a large percentage of its raw material requirements sourced from China, the ability to remit funds in RMB enables Royal Palace to expand its supplier base whilst clearly demonstrating to existing suppliers that the company is committed to doing business in China.
“Businesses in the Middle East view China as one of the most important growth markets for trade in the next six months,” said Simon Vaughan Johnson, regional head of commercial banking, hSBC Middle East and North Africa. “Th e ability to settle trade and other international payments in RMB provides clients with more fl exibility when determining payment terms with their supplier base in China thus creating the potential to open up new opportunities for expansion into Asia. Th is increased fl exibility is likely to result in further trade between the two regions.”
Vaughan Johnson also highlighted hSBC’s strategic focus on enabling clients in the region to maximise international opportunities, with a particular focus on the world’s emerging markets.
“This deal clearly demonstrates our capacity to facilitate international business, which is a key element in ensuring that hSBC MENA remains the number one trade bank in the region. Our teams are committed to working across geographies and teams within hSBC to better serve our clients, wherever they operate. As trade with China continues to develop in importance for our customers around the MENA region, I foresee an increase in the customer demand for RMB settlements.”
Previously, settlement in RMB for cross-border trades was permitted only between fi ve pilot cities in mainland China, hong Kong, Macau and the member countries of the Association of Southeast Asian Nations. In June this year, the People’s Bank of China, China’s central bank, opened the programme up to a further 20 provinces as well as countries around the world, and in August 2010 hSBC China became one of the fi rst foreign banks to have completed RMB trade settlement transactions at its eligible branches located in the 20 designated provinces.