Chinese bank sells 2b yuan in notes in London amid internationalization

Industrial and Commercial Bank of China Ltd has sold 2 billion yuan ($328.5 million) in dim sum bonds, which are yuan-denominated bonds, in London.

The offering was oversubscribed by four times and eventually priced at the lowest end of the range.

The issue came on the same day as Chris Salmon, chief cashier of the Bank of England, was quoted by Bloomberg News as saying that the United Kingdom's central bank is ready to help establish a clearing bank for yuan transactions in London.

The lender is the second Chinese bank to issue yuan-denominated notes in London. The city wants to become an offshore hub for yuan trading.[Photo/China Daily]

The two developments highlights London's goal of becoming an offshore hub for trading the Chinese currency, as financial centers around the world scramble to cash in on the yuan's global rise.

ICBC, which is China's largest lender by assets, is the second Chinese bank to issue yuan bonds in London. China Construction Bank Corp offered 1 billion yuan last year.

ICBC's offering consisted of two tranches. One is for 1.3 billion yuan, with a three-year maturity and a 3.35 percent coupon; the other, at 700 million yuan, has a five-year maturity and a 3.75 percent coupon, the bank said in a statement on Wednesday.

The proceeds will mainly be used to boost offshore yuan-denominated loans. The underwriters include Royal Bank of Scotland Plc, Standard Chartered Plc and JPMorgan Chase & Co, the Financial Times reported.

"Investors are in high spirits about our offering," said ICBC in the statement.

Salmon told Bloomberg in an interview on Tuesday that while the UK doesn't "absolutely" need a specific institution for yuan transactions, there is a "will in the market for a London clearing bank to be established.

"We'll be prepared to facilitate that", he told Bloomberg.