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ICBC Luxembourg Branch to Provide RMB Liquidity on Clearstream Tri-party Collateral Management Platform

On 1 Dec 2015, a first RMB tri-party trade between ICBC Luxembourg Branch as cash giver and Banque Internationale à Luxembourg (BIL) as cash taker was conducted on Clearstream’s Tri-party Collateral Management Platform, the Global Liquidity Hub, marking the first ever RMB Tri-party repo transaction by a Chinese bank in Clearstream.

For this reverse repo, ICBC Luxembourg Branch provided RMB liquidity to BIL with a tenor of 2 weeks, collateralized by high investment grade sovereign bonds. Against the backdrop of tight liquidity on the offshore RMB market, encouraged by the IMF’s decision to include RMB into the SDR basket as from 1 October 2016, ICBC Luxembourg Branch took this move on the tri-party platform, aiming to provide another funding possibility for those counterparties looking for RMB liquidity.

Mr. Yongzhao FANG, Assistant General Manager of ICBC Luxembourg Branch, said: “As the RMB Clearing bank in Luxembourg, ICBC Luxembourg Branch has been always looking for measures to improve the offshore RMB market conditions, by giving more choices of liquidity supply, complementing the spectrum of RMB products and services, and providing hands-on experience on how to realize and benefit from a wider use of the currency. We hope to open a new door of opportunities to the players on the offshore RMB market. ICBC is determined to improve the currency use in Europe.”

Philippe Seyll, Co-CEO of Clearstream Banking, said: "We are very pleased ICBC chose Clearstream's Global Liquidity Hub for handling their tri-party repo trades. This successful trade is not only a further step towards strengthening our good relationship with ICBC, it is also part of our wider efforts to support Chinese banks in doing business in Europe."

ICBC Luxembourg Branch was designated as RMB clearing bank in Luxembourg on 16 September 2014. The Bank also signed a Memorandum of Understanding with Clearstream Banking for pursuing joint efforts on the RMB offshore market. In March 2015, ICBC Luxembourg Branch became a new RMB cash correspondent bank for Clearstream. In July 2015, ICBC Luxembourg Branch launched an investigation into the Tri-party repo project together with Clearstream, and gained the valuable support from the local counterparty to complete the deal within this year. This recent tri-party repo deal is another joint victory of milestone significance.

Sharing the same team with ICBC Luxembourg Branch but positioned as the regional headquarter of ICBC on Continental Europe, with offices in Luxembourg, France, Belgium, the Netherlands, Italy, Spain, and Poland under its management, ICBC (Europe) S.A. was also the first financial institution to set up the Luxembourg-domiciled RQFII UCITS fund invested on China Interbank Bond Market, and was also among the first in Luxembourg to get its own RQFII license and quota of RMB 4 billion.

This first RMB trade can be seen as an enrichment of financing tools for RMB as well as a facilitation of greater liquidity supply on the offshore RMB market. With accelerated RMB internationalization and wider market response, ICBC will continue, as always, to promote the offshore RMB market development and make due contributions as the leading RMB bank in the world.

About ICBC Luxembourg Branch

ICBC Luxembourg Branch was established in 1999, and has a full banking license regulated by the CSSF in Luxembourg. The Bank was designated as the official RMB Clearing Bank in Luxembourg by the PBoC in September, 2014.

ICBC Limited has two banking entities in Luxembourg, with ICBC Luxembourg Branch as a direct branch, and ICBC (Europe) S.A. established in 2006 as a full subsidiary. The two entities share the same team and complement each other with advantages of different banking licenses.

As ICBC’s regional headquarter in Continental Europe, ICBC (Europe) S.A. operates in major European cities including Luxembourg, Paris, Amsterdam, Brussels, Milan, Madrid, Barcelona, and Warsaw. With sound growth, ICBC (Europe) S.A. was awarded as “Best Bank in Luxembourg” by the Euromoney magazine in 2014. Besides retail and corporate banking businesses, ICBC (Europe) S.A. also operates three dedicated centers for private banking, investment banking and cash management. Also, in 2014, ICBC (Europe) S.A. set up the first-ever RQFII UCITS fund domiciled in Luxembourg and invested on China Inter-bank Bond Market, ushering in a new growth track on asset management. In November 2015, ICBC (Europe) S.A. received an RQFII quota of RMB 4 billion out of Luxembourg’s total RMB 50 billion for Chinese investments.