London overtakes Singapore as second biggest offshore yuan clearing centre

Chinese 100 yuan banknotes are seen in a counting machine.
Chinese 100 yuan banknotes are seen in a counting machine. PHOTO: REUTERS

HONG KONG (REUTERS) - London has overtaken Singapore as the second-largest offshore yuan clearing centre in terms of payments processing volumes, just behind Hong Kong, the global transaction services organisation Swift said on Thursday (April 28).

Singapore overtook London in February 2014, but the trend started to reverse in January this year. In March, the value of yuan payments in London was 21 per cent more than two years ago, Swift said.

Hong Kong still processes 72.5 per cent of all yuan payments, and the market shares of London and Singapore are 6.3 per cent and 4.6 per cent, respectively.

Swift data also showed that 40 per cent of all payments made between the United Kingdom and China and Hong Kong are exchanged in the yuan, 24 per cent in Hong Kong dollars and 12 per cent in sterling.

Since China Construction Bank London branch was appointed as the yuan clearing bank in the United Kingdom in June 2014, there has been a steady growth of yuan payments between the United Kingdom and China and Hong Kong.

"The UK's rise to become the largest offshore yuan hub outside Hong Kong reflects the importance that European companies are placing on their commercial relationships in China," Mr Eddie Norton, HSBC's regional head of payments and cash management of Europe, said.

"As other regional cities such as Frankfurt and Paris strive to increase their yuan business, the outlook for European trade and investment flows with China looks increasingly bright," Mr Norton said.

The yuan remained the fifth most-used currency for global payments by value in March with a market share of 1.88 per cent, slightly higher than 1.74 per cent a month earlier, according to Swift.

Overall, yuan payments value in March increased by 18.46 per cent from a month earlier.