HSBC completes first Chinese renminbi trade

HSBC Corporate Banking Ireland has completed its first cross-border Chinese renminbi (RMB) trade transaction this week, becoming the first bank to announce such a transaction in Ireland.

The significance of the deal is that it enables HSBC’s client in the services sector to buy from its suppliers in China in their own currency.

It also means that for the first time, funds from the Chinese arm of HSBC’s business can be brought back into Ireland.

This development has the potential to open the “floodgates to Irish — Chinese trade”, said HSBC.

Previous restrictions on the movement of Chinese currency meant that trades by Irish exporters could not be conducted in the local currency and Chinese currency could not leave the country.

Until June 2010, settlement in RMB for cross-border trades was only permitted between five pilot cities in mainland China, Hong Kong, Macau and the member countries of the Association of Southeast Asian Nations.

That situation eased when last year The People’s Bank of China — China’s central bank — opened the program up to a further 20 provinces as well as countries around the world.

Sean MacHale, head of HSBC Global Markets Ireland, said: “This is a major step forward for Irish trade with China, opening the door to new trading opportunities. China is one of the most important growth markets for Irish business and it will continue to offer great opportunities over the next number of years.

It was vital for Irish exporters to be able to sell into these local markets on the most favourable terms, he said.

Being able to settle trade and other international payments in renminbi gives businesses “far greater flexibility when determining contract terms with both their supplier and customer base as well as demonstrating their commitment to doing business in China,” he said.

HSBC Corporate Banking Ireland has now joined its counterparts in Europe, Hong Kong and Australasia in closing landmark deals in China, he said.