Citibank achieves first cross-border renminbi lending deal

Citibank (China) Company last week completed its first cross-border renminbi lending transaction.

The bank said the transaction was conducted on behalf of a European food company, and was structured to optimize the company’s treasury activities by leveraging its China operation’s surplus cash.

The lending to the company’s group treasury center in Singapore is key to expanding and including the renminbi into its treasury management currency basket. It also means important progress for the renminbi’s internationalization by creating a larger role for the renminbi in global treasury management operations bu multinational firms.

The People’s Bank of China first introduced the renminbi cross-border initiative in July 2009 to give companies greater foreign exchange savings and operational efficiencies and to promote the internationalization of the currency.

The Shanghai branch of China Construction Bank last November conducted the first renminbi-denominated cross-border lending transaction valued at US$23.9 million.

Also in November, Standard Chartered Bank said it had submitted applications to Chinese regulators to conduct a transaction worth US$530 million for a multinational in the USA.

Analysts said that multinationals are also conducting these transactions to transfer profits and avoid taxes.