HSBC has secured a mandated to act as custodian bank in China for Industrial and Commercial Bank of China (Europe) (ICBC Europe), which recently secured regulatory approval as a Luxembourg-based Renminbi (RMB) Qualified Foreign Institutional Investor (RQFII).
The RQFII programme, which was extended to Luxembourg in April 2015 with a quota of RMB50 billion (USD8.0 billion), is designed to open up China’s domestic capital markets to overseas investors using RMB. Luxembourg marks the fifth RQFII market in Europe and HSBC is supporting the first investors from each of these markets. ICBC Europe’s RQFII license also continues HSBC’s 100% track record of successful quota applications on behalf of its clients.
Sophia Chung, Head of Securities Services, China, HSBC, says: “This development demonstrates the important role that Luxembourg plays in the internationalisation of the RMB as a hub for cross-border RMB business in the Eurozone. With the uptake of the RQFII programme, we expect institutional investors across Europe to use Luxembourg as a gateway to China and we also expect more Chinese financial institutions to establish a fund domiciled in Luxembourg. We are delighted to be working with ICBC Europe on this initiative.”
ICBC is one of six Chinese banks with a presence in Luxembourg, which is the largest fund centre in the world after the US. ICBC was also appointed as the RMB clearing bank in Luxembourg in 2014.
Bing Li (pictured), Head of Asset Management Department at ICBC Europe, says: “This is a key milestone, which further strengthens our position in Europe. Given our established presence in Luxembourg, it was important for us to be among the first RQFIIs from this market with valuable facilitation from HSBC.”
As of 31 October 2015, HSBC was the custodian bank for RMB 200.6 billion of investment quota for RQFIIs, which was equivalent to 48 per cent of the total amount approved
