China Merchants opens London branch

Performers in Chinese costume celebrate the launch of CMB London Branch on June 16, 2016. [Photo by Cecily Liu/chinadaily.com.cn]

"The CMB is one of the many success stories of China's market oriented reform and opening up, which started more than 30 years ago. The success of CMB today is a very reflection of China's endeavor to build a market oriented economy and this is the best answer to some European politicians who still doubt about China's market economy status," said Liu.

CMB was founded when China's financial market was undergoing market-oriented reform and opening up. Previously, China's banking sectors were dominated by the big four state owned banks, and regulatory changes in the 80s allowed the establishment of joint-stock commercial banks, and CMB became one of the first such banks.

CMB's majority shareholder is the state-owned enterprise China Merchants Group. It became a public company listed on the Shanghai Stock Exchange and Hong Kong Stock Exchange in 2002 and 2006 respectively.

In addition to London, CMB also has overseas branches in New York, Luxembourg and Singapore. Its total assets amounted to 5.47 trillion yuan ($830 billion) as of December 2015.

Wang Lianghua, a partner at the law firm King and Wood Mallesons, said he expects China Merchant Bank's move into London to be followed by many more Chinese commercial banks, as they follow their Chinese clients abroad. "Each Chinese commercial bank has their own client base, so it is only natural for their expansion to follow the surging wave of Chinese firms going abroad."

Duncan Innes-Ker, the regional editor for Asia at the Economist Intelligence Unit, added that he sees more potential for Chinese banks to provide financing following the roll-out of the One Belt One Road initiative, which connects Europe and Asia through infrastructure to boost trade and investment flows.

Meanwhile, the growth of London's offshore renminbi activities has placed Chinese banks in a key position to provide renminbi products and services. In April, London overtook Singapore to become the second largest offshore renminbi clearing center, according to Swift, the global payments system.

The latest Swift data shows the UK accounts for 6.3 percent of all offshore transactions using the renminbi, compared to Singapore's 4.6 percent.

Currently there are also 89 renminbi bonds listed on the London Stock Exchange, raising an aggregate of 36.75 billion yuan ($ 5.83 billion).