CCB's London clearing bank prize seen as a major yuan milestone

China Construction Bank's appointment last week as the sole yuan clearing bank in London is a milestone step to grow mainland banks' market share in the city and is likely to kick off a fight for clients in the largest yuan hub outside Asia, bankers said.

CCB beat three other state lenders - Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China - to become the sole clearing bank for yuan settlement in London, the Financial Times reported on Thursday, citing unnamed sources. CCB declined to comment on the matter.

The move surprised some bankers as Bank of China had been thought the most likely candidate to win the lucrative clearing business since it was the only mainland lender with a branch in the city.

Meanwhile, ABC was also hopeful since it had been cooperating with Standard Chartered to provide yuan clearing services in Britain since last year.

Yuan clearing business is a lucrative business that every lender is vying for, especially in London, the largest foreign exchange trading centre for the currency apart from Hong Kong.

Two-thirds of yuan trading conducted outside the mainland and Hong Kong are now through London, with spot trading volumes of the currency averaging US$2.5 billion a day, according to data from the City of London in October last year.