Standard Chartered, the UK-listed bank, and Agricultural Bank of China have signed a memorandum of understanding to provide Renminbi clearing services in the UK.

Standard Chartered, the UK-listed bank, and Agricultural Bank of China have signed a
memorandum of understanding to provide Renminbi clearing services in the UK, an example of the kind of UK-China trade
links that UK prime minister
David Cameron is trying to foster with his visit to Asia’s
biggest economy this week.

Under the StanChart/ABC agreement, financial institutions
and corporates can execute RMB transactions.

The deal underscores how China, which has been allowing its
currency to gradually appreciate – although it is not entirely freely floating –
against currencies such as the dollar, is looking to make the Renminbi a global
reserve currency. The move also plays to how London is the world’s largest centre for
foreign exchange trading. Standard Chartered earns the bulk of its revenues
outside the UK, in regions
such as Asia.

Cameron and a delegation of business leaders have been in China this week
drumming up support for bilateral trade. While European firms have been seeking
to penetrate the Chinese economy – typically having to do so via joint ventures
– China’s
rising business muscle has seen the country become a significant investor.
Also, high net worth Chinese individuals have, among others, been buying into
areas such as London’s
prime residential market, for example.

The Standard Chartered/ABC agreement amounts to a renewal of
the MOU signed between the banks three years ago, StanChart said in a statement
yesterday.

In July 2010, Standard Chartered subscribed to $500 million
of ABC’s H-Share initial public offering.

“During their 3-year partnership, the two banks have
significantly increased their mutual trade volumes both domestically and
internationally and supported each other’s expansion plans in China and abroad,” the StanChart
statement said.