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Frankfurt’s establishment as one of the Eurozone’s first offshore clearing hub for RMB trade settlement along with the city of London will be a huge boost to European corporations trading with China, especially those that are mid-sized, a senior Commerzbank official says.
Frank-Oliver Wolf, Global Head of Cash Management and International Business at Commerzbank, comments: “The establishment of a renminbi clearing hub in Frankfurt signifies a real business development – particularly for medium-sized exporting companies, such as machinery producers, which will now be in a position to settle directly in RMB via their local market.”
Wolf continues: “These companies will be able to eliminate the costly need to route renminbi payments via other financial centers, potentially resulting in lower costs when dealing with their Chinese counterparts. What’s more, they will most likely have a time zone advantage, which will speed up the settlement of cash business, and the market will become more transparent with most of the payment chain handled in Germany. As such, we expect an increasing number of corporate clients to therefore begin settling and invoicing in RMB – which should provide them a competitive edge when establishing trading partnerships in the Asian region.”
The comments came in advance of German Chancellor, Angela Merkel’s meeting with Bank of China President, Mr. Chen Siqing, on Monday July 7th to mark the Bank of China’s official appointment as Frankfurt’s offshore renminbi clearing bank. German Finance Minister, Wolfgang Schäuble, and CEOs of important Germany companies were also present. The clearing bank was nominated on June 19th following an agreement signed by the central banks of Germany and China for Frankfurt to become a renminbi clearing hub on March 28th.
The Frankfurt hub is expected to further boost Sino-German trade relations. Germany is China’s leading trade partner in Europe and according to the German Federal Statistics Office, bilateral trade between the two countries reached EUR 140 billion last year (US$192 billion). According to the statistics, China is also Germany’s principal trading partner in Asia, and its third most important trading partner worldwide.
Commerzbank is well-positioned to support its customers in their trade business with China, with four subsidiary branches in Beijing, Tianjin, Shanghai and Hong Kong, where the bank offers RMB account opening, as well as a full range of payment services and offshore products at its local branches.