RMB market continues to expand as new RMB service announced, and as figures show major growth in 2013 and more expected in 2014.

Deutsche Bank automated RMB cash sweeping services

Deutsche Bank’s Global Transaction Banking division has announced the introduction of automated Renminbi cash sweeping services for cross-border lending to its corporate clients in China. This will use a sub-branch in the China (Shanghai) Free Trade Zone for which Deutsche Bank received preliminary approval in November 2013. 

The need for more efficient processes from banks has become a priority for China-based corporate treasurers. This follows the issuance of PBOC’s circular No. 168 in July 2013, which allowed cross-border Renminbi intra-company loans as a tool to maximise the use of their cash. 

The new Deutsche Bank service enables automated Renminbi cash sweeping services between cross-border intra-company accounts, thereby giving its clients an opportunity to gain time efficiencies. Corporates can set target balances and use this method to enhance their liquidity management. 

Carl Wegner, Greater China Head of Global Transaction Banking at Deutsche Bank said: “This will position Deutsche Bank well from a technical standpoint to offer new pilot services in the China (Shanghai) Free Trade Zone.” 

RMB growth in 2013

The RGI ended 2013 on a high note at 1,377 in December, up 5.9% from the previous month and 84.1% year-on-year, driven by rising deposits and cross-border payments. The rise of RGI re-accelerated in the fourth quarter, triggered by a return of Renminbi appreciation and the liberalisation in cross-border Renminbi lending regulations. 

London widened its lead over Singapore in 2013, in terms of both average daily CNH FX turnover and Renminbi cross-border payments; this offset its lack of Renminbi deposit growth. London and Singapore now account for 13.4% and 9.7%, respectively, of activity tracked by the RGI, versus 10.6% and 10.7% a year ago.  Hong Kong remained the biggest offshore Renminbi centre.

RMB usage growth predicted to continue in 2014

Expansion of new offshore centres, further policy push and the appreciation of the yuan currency will remain as key drivers for the RGI in 2014. Standard Chartered expect the RGI to increase another 60% to reach 2,200 by the year end. 

They also predict a 2% appreciation for the Renminbi to USD/CNY of 5.92 by end-2014 and believe this should bode well for more deposit accumulation this year. By end-2014, SCB expects Renminbi deposit in Hong Kong to hit CNY1.15-1.2 trillion, translating into a 34-40% increase, while Taiwan’s could reach at least CNY250 billion.

Continuing prospect of the yuan appreciation and still ample offshore liquidity has lent support to the Dim Sum bond market amid weak market sentiment. January primary issuance hit a monthly record high level of CNY63 billion and SCB expect strong primary issuance of CNY550-580 billion for 2014.