UK Inks Ground-Breaking China Deal to Be First Western Hub for Offshore RMB Trading

Britain has inked a ground-breaking deal with China that allows the Industrial and Commercial Bank of China (ICBC) to issue a renminbi bond in London next month.

The move, the first of its kind according to the UK government, comes as Chancellor George Osborne led a trade delegation to China and agreed on series of steps with the country, in a bid to cement London's role as a global offshore hub for trading the Chinese currency.

The agreement is the resulting centrepiece following two-days of talks between Osborne and his Chinese counterpart Vice-Premier Ma Kai during the Economic and Financial Dialogue between Britain and China.

"Both sides welcomed this as an important step that cements London's major role as one of the most important global centres for RMB trading," said Britain and China in a joint statement.

The countries added: "London has already established itself as the Western hub for offshore RMB trading, as part of a partnership with Hong Kong and following an earlier agreement between Britain and China to support London as a RMB centre in September 2011."

The UK government revealed that investors will be able to apply for a licence to invest RMB directly into China, under a RMB Qualified Foreign Institutional Investor pilot. London's initial quota has been set at ¥80bn (£8.2bn, $13.1bn).

The government also said that the Prudential Regulation Authority will begin discussions with Chinese banks in London to enable them to apply to establish wholesale branches in the UK, allowing them to scale-up their business activities in the UK.