JP Morgan has been granted permission by the Chinese government to provide renminbi (Rmb) cross-border trade settlement services.
The services will be offered to China-based corporate clients, with JP Morgan Chase China acting as the local bank for the transactions.
The bank now offers import letter of credit (LC) issuance and payment, export LC advising, negotiation and confirmation and standby LC or bank guarantee issuance, all in Rmb.
Dani Cotti, global trade executive at JP Morgan treasury services, believes that cross-border Rmb settlement will help combat volatile foreign exchange rates. He tells GTR: "JP Morgan is proud to play a role in pioneering the availability of Rmb trade settlement services. Domestically, the main purpose of Rmb inter-nationalisation is to provide relief in the imports/exports space.
“Given the recent turmoil in the domestic markets, Chinese companies engaging in cross-border transactions remain vulnerable to foreign exchange volatility. By promoting Rmb as a trade currency, the Chinese government is helping Chinese corporates mitigate foreign exchange risk. On a global scale, this initiative is a significant step in the government’s aim to promote Rmb as an alternative to US dollars as primary trade currency, as well as of improving trade relations with neighbouring countries."
Lisa Robins, treasury and security services China executive at the bank, adds: “We are proud to be one of the few foreign banks to be authorised to offer Rmb cross-border settlement services from Shanghai and remain committed to growing our China operations to better serve our local and regional clients.”
This follows the bank’s Hong Kong branch received authority to originate and receive payments in Rmb to settle applicable trade transactions with approved corporates based in mainland China.
JP Morgan is the latest in a line of banks that have begun Rmb trade settlements in China, including HSBC and Standard Chartered.
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