Commerzbank Launches Renminbi Clearing in Frankfurt

Commerzbank has signed a deal with the Bank of China that will allow it to clear and settle renminbi payments, China’s domestic currency, directly from Frankfurt.

The bank will launch the service on November 17, coinciding with the launch of the Shanghai-Hong Kong Stock Connect which will go live on the same day. It will allow its corporate clients a new way of making Chinese currency payments directly to the mainland China without channelling them via Hong Kong.

“We are systematically expanding our offering in China and in renmimbi business. In our opinion the launch of renminbi clearing in Frankfurt will increase the share of German SME (small-to-medium enterprises) using renminbi for their trade with China to well over the current 10%,” says Frank-Oliver Wolf, divisional head, cash management & international business, Commerzbank.

The deal will put it ahead of rival Deutsche Bank, which signed a memorandum of understanding (MoU) with the Bank of China in August for the clearing and settlement of offshore yuan in Frankfurt, because it will have a “psychological effect”, according to Wolf.

“German companies see that the clearing bank in Frankfurt is closer to them. This will make it easier for many corporate clients to put this currency topic on the agenda,” he adds.

Commerzbank settles about one-third of Germany’s foreign trade, in which trade with China alone amounted to EUR 86.5 billion in the first seven months of this year.

According to the bank, it expects the launch of the Renminbi Clearing Center in Frankfurt to lead to a marked increase in trade in renminbi-denominated currency and interest rate hedging instruments.