Launch of first direct settlement in Chinese Renminbi currency 

HSBC is the first and only bank in Malta to enable business customers to open a Chinese Renminbi (RMB) account to carry out and settle RMB cross-border trade deals directly withChina. Through this capability, Maltese and Chinese businesses will face less foreign exchange transaction costs and currency fluctuation risks, and in the process will be able to negotiate better terms of trade.

The official launch of HSBC BankMalta’s RMB cross-border trading took place at a reception for customers and the media and which was addressed by Hon Finance Minister Tonio Fenech, H.E. Chinese Ambassador Zhang Keyuan and HSBC Chief Executive Officer Alan Richards.

This initiative allows Maltese companies trading with partners fromChinathe opportunity of opening accounts in RMB to enable direct settlement of trade transactions in this currency through transfers as well as a wide range of trade finance instruments, including letters of credit, and guarantees.

Offering solutions for payments in RMB is a natural benefit of the HSBC Group’s presence inChinaandHong Kong, its deep knowledge of this market, and its global network of customers who want to trade in the Renminbi. HSBC has been inChinafor 146 years and is one of the most recognizable foreign banks in the country. In November 2010, it became the first international bank to complete an RMB trade settlement across all six continents. HSBC was also the first international bank to trade offshore RMB foreign exchange options and the first to execute RMB interest rate swaps inHong Kong.

“The launch of the Renminbi trade settlement capability is an important initiative for the local business community inMaltaand further reinforces HSBC’s position inMaltaas the leading bank for international business. Trade flows betweenMaltaandChinaare growing and this is an exciting opportunity for us to help our customers develop their business inChina. I am delighted to say thatMaltahas now joined over 40 other markets where HSBC has been a pioneer in facilitating RMB trade settlements,” said HSBC’s Chief Executive Officer Alan Richards.

Finance Minster Tonio Fenech welcomed this initiative which will be facilitating trade with China, describing it as good news for Maltese businessmen. “Relations with China have flourished, with various exchanges in the political, economic, cultural and educational fields. Trade and commercial relations are already very strong, but it is in both countries’ mutual interest that the potential for further growth in trade relations is exploited,” he said.

In this context, and with the added benefit of the Double Taxation Treaty signed with China last November, Minister Fenech welcomed HSBC’s decision to offer such a proposition which lessens the risk and the costs involved in trade cycle transactions, resulting in better terms of contract for Maltese businesses importing from China.

Chinese Ambassador Zhang Keyuan said: “With the long-existing excellent bilateral relationship between China and Malta, I am very happy to witness that the trade and investment cooperation has developed remarkably. The trade volume has reached €98.6 million in the first 5 months this year with Maltese exports toChinaincreasing to €30.4 million. Financial cooperation between the two countries has flourished. I am sure that HSBC’s RMB trade settlement service will benefit both Chinese and Maltese customers involved in trade between the two countries.”

Chinais the second largest economy, the largest exporter and the fifth largest source of foreign direct investments in the world. HSBC experts predict that in as little as five years, some 30% ofChina’s international trade will be conducted in RMB. By 2015, the expectation is that RMB will be a top three international currency, together with the USD and EUR, if it becomes fully convertible, withAsiaand the emerging markets leading RMB trade and investment.

A survey conducted by HSBC Bank inChinaamong 1,300 companies from 18 Chinese cities showed that almost 8 in 10 companies from mainlandChinathat do not settle trade with their cross-border partners in RMB are planning to do so.

The RMB market has gone from being non-existent to having over USD3 billion turnover a day in just 15 months, making it one of the fastest growing currencies in the world. In the first three months of this year, RMB trade settlements were 15% higher than in the same period last year, and 20 times more than in 2009. HSBC’s experts expect that by 2015, the value of trade settlements in RMB will reach around USD2 trillion.