China opens first renminbi clearing bank in South America

An outlet of China Construction Bank (CCB) in Yichang, Central China's Hubei province, June 16, 2016. [Photo/IC]

SANTIAGO - China Construction Bank (CCB) has opened the first clearing bank for transactions in renminbi in South America in Chile's capital Santiago, the CCB said on Tuesday.

The branch was inaugurated Monday night, after receiving all the needed permits from Chile's banking authorities.

More than 200 guests attended the inaugural ceremony. Guo You, president of the CCB's Supervisory Council, expressed his appreciation for the support the entity received in the South American country.

The South American branch of the CCB, one of the world's top 10 banks, will not only help boost economic and trade exchanges and financial collaboration between China and Chile, but also help the bank expand its services in Latin America, said Guo.

Initially, the branch will provide corporate banking services and actively promote cross-border?yuan transactions, which will help facilitate trade, Guo said.

"The inauguration of this bank in Chile is a fundamental milestone in ties between the two countries," former Chilean President and current Senator Eduardo Frei told the opening ceremony.

While Chile-China ties have been close, Chinese investment in the country has lagged behind, said Frei. Opening a bank branch in Chile is the most important Chinese investment in the country to date, he said.

"It's going to be the first renminbi clearing bank not just for Chile, but also for South America," said Frei.

During Chinese Premier Li Keqiang's visit to Chile in May 2015, the presidents of the two countries' central banks signed an agreement that paved the way for the opening of the CCB branch, recalled Frei, underscoring the importance of having a banking entity in Chile capable of carrying out direct transactions in the Chinese currency.

"The financial losses from currency exchange operations were significant, and carrying out operations directly in China's currency, the renminbi, is going to particularly benefit Chile and China's small and medium-size companies," said Frei.

The CCB, said Frei, is one of the world's largest companies and by establishing itself in Chile, it is demonstrating not just the high level of ties between the two countries, but also its trust and confidence in Chile's development, and in becoming an economic platform for all of Latin America.

Chilean Economy Minister Luis Felipe Cespedes said the CCB's entry into Chile was a reflection of the country's robust business climate.

The branch, said Cespedes, "allows us to tighten and strengthen ties between the two countries, which today are strong because China is our leading trade partner and, with the establishment of the bank, we can raise the financial channels and investment in our process of integration with the world."

Rodrigo Vergara, Chile's central bank chief, stressed the importance of the 2015 monetary agreement that facilitated the use of the?renminbi in Chile, and allowed Chilean investors to invest in China's stock market.

Chinese ambassador to Chile Li Baorong said: "The opening of the branch is not just about a Chinese bank expanding operations abroad, but also about the deepening of substantial cooperation between the two countries, and of the confidence that Chinese financial institutions have in the future of our sister country, which is Chile."

In 2015, Chile and China celebrated the 45th anniversary of diplomatic ties, while 2016 marks the 10th anniversary of their free-trade agreement.