A success for Frankfurt as a financial center: Deutsche Bank has been designated by the People's Bank of China, the country's central bank, as the first European bank to act as a renminbi clearing bank, according to an announcement issued on Monday evening.

Clearing in Frankfurt will provide financial institutions and companies with direct and rapid processing, clearing and settlement of cross-border renminbi transactions, helping to strengthen financial links between Europe and China.

«Globally Trusted Clearing Bank»

Alexander von zur Mühlen, CEO Asia Pacific, Europe, Middle East & Africa and Germany at Deutsche Bank, commented: «The mandate as a renminbi clearing partner in Europe strengthens our role as a globally trusted clearing bank and underscores our long-standing commitment to the internationalization of the renminbi. This will enhance financial connectivity between China and Europe and enable us to better support our clients in cross-border trade and investment activities.»

Renminbi clearing was already available in Europe, but only through branches of Chinese banks.

From the Race for a Renminbi Hub to Business as Usual

More than a decade ago, establishing a renminbi hub in Europe was a major issue, triggering competition among the continent's financial centers. In Switzerland, the hub accordingly became an important prestige project for the country's banking industry.

In October 2015, China Construction Bank (CCB) received a banking license from the Swiss Financial Market Supervisory Authority (Finma). When CCB's Zurich branch opened in January 2016, numerous prominent representatives of the Swiss financial center and public authorities attended the event. CCB has handled renminbi clearing in Switzerland ever since.

In January 2021, finews reported that CCB had by then processed transactions worth almost 600 billion francs and that 13 Swiss partner banks were participating in the hub. Today, Zurich is an important center for the offshore renminbi ecosystem.

It is not known whether a Swiss bank is also seeking clearing status. UBS and Zürcher Kantonalbank would likely be the only potential candidates.