The UK government-controlled Royal Bank of Scotland (RBS) is bailing out of equities in Asia and going big on bonds, in particular those denominated in offshore yuan.
The bullish bet on the mainland currency underscores growing confidence in Beijing's ambition to further internationalise the yuan in the coming years.
The Edinburgh-based RBS, which was rescued by British taxpayers in the 2008 financial crisis and is now 83 per cent government owned, plans to focus on the fast-growing market in yuan-denominated - or 'dim sum' - bonds. The bank is also expected to play a key role in furthering Britain's aim to copy Hong Kong's success and make London an offshore yuan-trading centre for Europe.
Manfred Schmoelz, head of transaction services origination for RBS in Asia-Pacific, told the South China Morning Post that he hopes London and Hong Kong can set up a 'common platform' for offshore yuan trading to beef up global volume and better meet client demand.
'Europe is a big investor into the Asia region and China,' said Schmoelz, who joined RBS about half a year ago from Deutsche Bank, where he served for more than two decades. 'If they can use the London window with the partnership with Hong Kong, I think both cities should have great chance to establish themselves in that market.'
Chinese companies were also rushing into the European market and demands for capital-raising in the debt market to support their international business expansion were growing rapidly, he said.