HSBC announced the completion of its cross-border Renminbi (RMB) trade settlement, a first of its kind in Sri Lanka. HSBC Sri Lanka worked with one of its top clients MAS Intimates (Pvt) Ltd, a subsidiary of apparel giant MAS Holdings to effect an RMB outward remittance to their Hong Kong based supplier for the purchase of knitted fabric.
With this announcement, HSBC Sri Lanka joins its counterparts in Europe, Middle East and Asia in closing a landmark RMB deal. HSBC Sri Lanka Chief Executive Officer Nick Nicolaou says: “We’ve been working towards completing our first RMB transaction for some time now and this represents a milestone for Sri Lanka in terms of doing business with China. Given that HSBC is the biggest international bank in China, we have been able to capitalize on this opportunity.
The ability for HSBC to support Sri Lankan companies in making payments to their suppliers in RMB rather than having to convert to US dollars, means that they will now have another option that will make it simpler and more economical for businesses that trade with China”.
“From the inception of our business we have been importing raw materials from the Far East. Until now all of these transactions have been done in US dollars. Increasingly, in the last 10 years raw materials have been coming from China. We are pleased that we can now execute currency transactions in RMB. We firmly believe that this initiative will increase our cost competitiveness in the future. We see this as a positive initiative and we are happy to be associated with HSBC in doing the first transaction. We welcome the Government’s move to introduce RMB as an authorised foreign currency in Sri Lanka,” said MAS Holdings Chairman Mahesh Amalean.
HSBC Corporate Banking Head Chamira Wijetilleke says: “This is an important milestone in the journey towards the RMB becoming one of the major currencies in global trade. Our ability to provide RMB products highlight how HSBC’s global capabilities better equip it to support clients’ needs involved in international trade. Having the ability to pay business suppliers directly in RMB will enable customers to maintain a competitive supply chain. We believe that RMB denominated trade will continue to grow cross border, leading to increased demand in Sri Lanka for RMB trade and payment solutions.”
As a leading international bank, HSBC sees great potential in RMB business and will support the policy of gradual internationalization of RMB. By offering RMB trade finance and other RMB products, the Bank can provide customers with more flexibility when doing business with mainland China and cross-border trade settlements to reduce transaction costs.
It is anticipated that within five years 30% of China’s trade will be settled in RMB and that it will become one of the top three currencies used in global trade.
HSBC was the first foreign bank to issue RMB bonds in Hong Kong, the first to undertake a cross-border RMB settlement and the first to establish a RMB trade finance standard rate for reference.
HSBC was the first bank to conduct RMB denominated trade settlement across all its ASEAN sites under the RMB trade settlement pilot scheme.
HSBC Corporate Banking offers a range of RMB services including trade finance, foreign exchange, outward & inward remittances, commercial current account & deposits for corporate clients.