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MarketScreener Homepage  >  Equities  >  Shanghai Stock Exchange  >  Bank of China Limited    601988   CNE000001N05


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Morgan Stanley, Citi vying to clear yuan trades in U.S.: executive

10/20/2016 | 10:55am EST
Chinese 100 yuan banknotes are seen on a counter of a branch of a commercial bank in Beijing

(This October 19 story makes clear in paragraph 3 that Xu is head of Bank of China in New York)

Appointing banks to clear yuan <CNY=CFXS> trades is part of China's drive to encourage worldwide use of the currency, also known as the renminbi, which it hopes would some day supplement or rival the dollar as a global reserve currency.

Unlike other countries where China is also trying to expand the yuan's reach, the United States will have two banks to clear renminbi trades, said Xu Chen, president and chief executive officer of BoC's <3988.HK> (>> Bank of China Limited) New York office.

This is in part because the advocacy group led by former New York mayor Michael Bloomberg that has championed wider usage of the yuan in the United States had asked China to allow a U.S. bank to clear renminbi trades in the country, Chen said.

China usually designates just one Chinese bank to clear all yuan trades in each country outside its borders.

Chen said Morgan Stanley (>> Morgan Stanley) and Citi (>> Citigroup Inc) are both looking into submitting their respective bids to the Chinese central bank, the People's Bank of China.

"Based on our understanding, the (advocacy) group suggested to the People's Bank of China (PBOC) that it adopts the approach of appointing one Chinese bank and one U.S. bank," he said.

The sheer volume of trade should help catapult the United States into the second-largest offshore yuan clearing centre after Hong Kong in three to five years, Chen said.

BoC was only appointed last month as the designated bank to clear yuan transactions in United States, which can currently be cleared through Hong Kong, London or Singapore, the major renminbi clearing centers outside China.

To that end, BoC plans to expand its yuan trading desk in New York and sell renminbi hedging services in the city before year-end, Chen said.

Morgan Stanley and Citi declined to comment. The PBOC was not immediately available for comment.

Despite strong trade ties between China and the United States - the world's two largest economies - Beijing has been slow in making inroads to set up a yuan market in the United States compared with other countries.

Chinese and U.S. officials have said this is partly due to a desire by some within the U.S. government to protect the dollar's status as the world's pre-eminent currency.

The United States was China's largest bilateral trade partner last year, with $558 billion worth of goods and services exchanged between the two countries, Chinese data showed.

The advocacy group for the yuan, which counts ex-Securities and Exchange Commission chair Mary Schapiro and former U.S. Treasury secretaries Timothy Geithner and Henry Paulson as its vice chair and co-chairs, includes JPMorgan Chase & Co (>> JPMorgan Chase & Co.), Wells Fargo & Co (>> Wells Fargo & Co) and Bank of America Corp (>> Bank of America Corp) as its members.

The yuan was the fifth-most-active currency for global payments in July, accounting for 1.9 percent of the market share, according to global transaction service provider SWIFT.

(Reporting by Koh Gui Qing, editing by G Crosse)

© Reuters 2016
Stocks mentioned in the article
ChangeLast1st jan.
AMP LIMITED 0.00% 1.73 End-of-day quote.-9.66%
BANK OF AMERICA CORPORATION -2.86% 28.16 Delayed Quote.-17.69%
BANK OF CHINA LIMITED 0.31% 3.25 End-of-day quote.-11.92%
GLOBAL PAYMENTS INC. -0.93% 195.19 Delayed Quote.7.93%
LINE CORPORATION 0.19% 5380 End-of-day quote.0.56%
MORGAN STANLEY -3.15% 61.83 Delayed Quote.20.95%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) 0.05% 6.5786 Delayed Quote.-5.57%
WORLD CO., LTD. -0.97% 1324 End-of-day quote.-50.80%
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Sales 2020 572 B 86 950 M 86 950 M
Net income 2020 171 B 25 995 M 25 995 M
Net Debt 2020 - - -
P/E ratio 2020 4,11x
Yield 2020 7,82%
Capitalization 899 B 137 B 137 B
Capi. / Sales 2020 1,57x
Capi. / Sales 2021 1,49x
Nbr of Employees 309 384
Free-Float 99,0%
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Jiang Wang Vice Chairman & President
Xi Quan Wang Chairman-Supervisory Board
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