A Chinese bank is set to open operations in Switzerland by the end of this year, according to Swiss Finance Minister Eveline Widmer-Schlumpf. The move would complete all the pieces of the jigsaw for Switzerland to become a renminbi trading hub.
Widmer-Schlumpf confirmed intense media speculation about the imminent arrival of the China Construction Bank (CCB) during a visit to China on Friday. At the annual meeting of the World Economic Forum (WEF) in Davos last month, she had hinted that China’s third-largest commercial bank was interested in a Swiss banking licence.
Once established, CCB could process the 150 billion yuan (CHF22.5 billion) trading allocation that Swiss companies have been granted to trade in China by an agreement signed between the two countries at the WEF.
This follows a deal struck last year to allow the Swiss National Bank to swap currencies with China’s central bank. The swap arrangement, trading allocation and the presence of a Chinese bank on Swiss soil are the three pillars necessary to establish Switzerland as a fully-fledged renminbi trading hub.
The status has been conferred on only a small number of countries worldwide as China seeks to internationalise its currency under controlled conditions. London, Frankfurt and Paris have already achieved the landmark in Europe, while Luxembourg has been allowed significant renminbi trading privileges.
Widmer-Schlumpf would not say in which city CCB would set up shop, but Le Temps newspaper recently ran an article stating that Zurich had beaten Geneva to the punch. Le Temps and the Finews portal last year also reported that China’s largest bank, the Industrial and Commercial Bank of China, had expressed an interest in Geneva, but these reports have not been confirmed.
Geneva once did briefly welcome the Bank of China inside its borders but it pulled out of Switzerland in 2012, allegedly following a rift with the Swiss banking regulator. The imminent arrival of CCB to Switzerland hints that any such regulatory issues have been smoothed over by diplomatic efforts.
In Peking on Friday, Widmer-Schlumpf also raised the question of Swiss bank branches in China being allowed full banking licences. At present, foreign banks operating in mainland China are only allowed to conduct limited business lines.
However, the finance ministry reported that there was no concrete solution to the question at present and a timetable had not been set for thrashing out the issue.