London's ambition to entrench itself as the leading offshore yuan centre in Europe poses no threat to Hong Kong, the City of London's Lord Mayor Fiona Woolf said. "Hong Kong has a special status in doing yuan business as it is part of China," Woolf told the South China Morning Post at the Asia Financial Forum. "London is not a competitor but a partner to Hong Kong, as London is keen on teaming up with Hong Kong to expand in yuan business." With many banks operating in both London and Hong Kong, she said this would present opportunities for the cross-selling of bonds and other yuan products in both markets. The central government first stated its plan for promoting greater use of the yuan internationally in 2009. It has since been gradually allowing people to use the yuan to settle trades or investments. Hong Kong was the first city outside the mainland to be allowed to conduct yuan business. In 2012, Beijing began allowing other cities - London, Singapore, Sydney and Tokyo - into the market. London is keen on teaming up with Hong Kong to expand in yuan business FIONA WOOLF, LONDON LORD MAYOR Bank of China's London branch last week launched a landmark 2.5 billion yuan (HK$3.1 billion) bond issue, the first by a European branch of a Chinese bank. Analysts said the deal served as confirmation of London's ambitions in the yuan market. "London would like to capture investors in the US, Europe and Latin America to trade the yuan products as London has always been a global financial centre," Woolf said. "But Hong Kong has a strong position in Asia and is close to China. London firms can sell yuan products in Hong Kong to capture Asian investors while Hong Kong companies can also use London to reach Western investors." Britain accounts for 62 per cent of the yuan trade settled outside Hong Kong and mainland China, according to payment firm Swift. In the first half last year, the value of overall yuan-related trade finance in London was three times higher than that of two years ago, she said. Yuan foreign exchange trading in London is also increasingly active, with an average daily trading volume of US$4.8 billion - almost double the US$2.5 billion seen in 2012. The London Stock Exchange will list the first renminbi qualified foreign institutional investor exchange-traded funds issued by mainland fund house CSOP Asset Management. Woolf said London could also share its experience in Islamic financing with Hong Kong. Both the British and Hong Kong governments this year each want to issue sukuks - bonds structured to Islamic requirements - to capture a share of a market worth about US$1.3 trillion.