Singapore stands to unseat Hong Kong as RMB trading hub

Singapore has issued full banking licenses to branches of two Chinese Big Four banks.

This is giving Singapore more teeth in its competition against Hong Kong to become Asia’s renminbi or RMB trading center.

The licenses also move Singapore a step closer to getting an RMB-clearing bank that will let it compete more aggressively with Hong Kong in the growing market for RMB-denominated trades and financial products.

The Monetary Authority of Singapore said it had issued the licenses to the Singapore branches of Bank of China and Industrial and Commercial Bank of China. ICBC is China’s biggest bank while BOC is the first Big Four bank to offer RMB products in the USA.

The licenses allow the banks to begin operations as full banks with qualifying full bank privileges effective Oct. 5.

The monetary authority said implementation details on the RMB clearing bank will be worked out by the relevant agencies in Singapore and China in due course.

Singapore is widely believed to have the largest pool of RMB deposits outside of China and Hong Kong, according to forex industry sources.

Chinese officials estimate Singapore has around US$9.54 billion in RMB currency deposits, placing it way ahead of other financial centers other than Hong Kong.