Chinese banks to become renminbi clearing bank in Singapore

SINGAPORE - Singapore's Ministry of Trade and Industry announced Friday that two eligible Chinese banks currently operating in Singapore will be granted Qualifying Full Bank (QFB) privileges, one of which will be authorized as a clearing bank for renminbi in Singapore.

The ministry did not name the two Chinese banks in the press release and said that "implementation details will be worked out by the relevant financial agencies in Singapore and China in due course."

Currently, there are three Chinese banks operating in Singapore, including Bank of China, Industrial and Commercial Bank of China and China Construction Bank, none of which are under the license scheme of QFB.

So far, there are eight QFBs in Singapore, which have greater access to the Singapore market than others because they are able to open more branches and undertake retail deposit business.

The city-state's central bank said late last month that it will issue new QFB licenses under free trade agreement negotiations.

Singapore has been pursuing a global offshore yuan market for a long time, during which granting a clearing bank for renminbi has been a topic in negotiations with China.

China will also expeditiously process all applications made by selected Singapore banks for the establishment of branches and sub- branches in China, subject to their prudential law, regulations and rules, the ministry said in a statement.

According to a press release by the China Banking Regulatory Commission, the selected Singapore banks include United Overseas Bank (China) Limited, Development Bank of Singapore Co Ltd and Overseas-Chinese Banking Co Ltd.

The initiatives this time are made according to the side letters inked between Singapore and China in Suzhou, East China, on Friday, aiming at enhancing cooperation in the banking services under the existing China-Singapore Free Trade Agreement, which was signed in 2008.