Mainland Chinese banks eye Luxembourg as euro zone hub
Yuan loan portfolios in the grand duchy up 35pc from year earlier to 72.8b yuan in first half
Luxembourg is rapidly growing as a channel for Chinese financing and investments flowing into the European Union.
China's direct trading of its currency with the euro, which began on September 30, will boost Luxembourg's role as a renminbi hub, said Nicolas Mackel, chief executive of Luxembourg for Finance, the agency responsible for promoting Luxembourg as a financial centre.
"This decision will encourage investors who use the euro as a base currency to directly trade in renminbi, since it will lower transaction costs. Thus, RMB business volumes in European RMB centres such as Luxembourg are likely to increase," Mackel said.
Renminbi loan portfolios in Luxembourg rose to 72.8 billion yuan (HK$92 billion) in the first half, 35 per cent more than the 53.8 billion yuan in the second half of last year and more than double the 29.3 billion yuan in the second half of 2012, according to official Luxembourg data.
Yuan deposits held by banks in Luxembourg rose to 67.2 billion yuan in the first half from 64.0 billion yuan in the second half of last year, it said.
This year three Chinese banks have announced plans to open their European headquarters in Luxembourg: Agricultural Bank of China, China Merchants Bank and Bank of Communications.
"They will join Bank of China, ICBC and China Construction Bank. So we will soon host the six largest Chinese banks here," Mackel said.