HSBC has been appointed custodian bank for the first Luxembourg-based renminbi qualified foreign institutional investor (RQFII), the Industrial and Commercial Bank of China (ICBC).
The mandate comes after ICBC Europe secured regulatory approval as an RQFII, and represents a continuation of HSBC’s 100 percent success rate for RMB quota application on behalf of its clients.
Designed to open China’s capital markets to international investors, the RQFII programme was extended to Luxembourg in April with a quota of RMB 50 billion ($8 billion).
ICBC is one of six Chinese banks with a presence in Luxembourg, and was appointed as the RMB clearing bank for Luxembourg in 2014.
Bing Li, head of the asset management department at ICBC Europe, said: “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.”
Sophia Chung, head of securities services for China at HSBC, said: “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.”
As of 31 October, HSBC was custodian bank for RMB 200.6 billion ($31.5 billion), equivalent to 48 percent of the total RQFII investment quota issued.
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