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German lender sees growth in yuan business

By Chen Jia (China Daily)

13:39, June 07, 2012

Commerzbank AG, Germany's second-largest bank, expects fast expansion in the Chinese market this year, supported by rapid growth in yuan-denominated business, despite a dim near-term outlook for Sino-EU trade and investment.

The bank, headquartered in Frankfurt, aims to grow its corporate banking business in China by as much as 30 percent this year, executives said.

The new yuan-denominated accounts of European customers are likely to rise rapidly, the bank's senior managers said at a news conference on Wednesday.

"We see renminbi-denominated cross-border trades are picking up, as an increasing number of Chinese companies use the currency to pay overseas while many German companies are receiving renminbi in Germany", said Michael Kotzbauer, regional board member for Asia at the bank.

The bank's revenue in China grew more than 30 percent last year, compared with expectations of 20 percent, he said.

Meanwhile, the number of yuan accounts "has seen triple-digit growth" and cross-border transactions in the Chinese currency have expanded considerably, said the bank, without disclosing exact numbers.

The internationalization of the Chinese currency is accelerating, driven by rapidly increasing market demand for the yuan for settlement of cross-border trades.

Commerzbank is studying and improving transactions in renminbi-denominated derivatives, including options and swaps, according to Nick Johnston, head of corporates and markets for Asia at the bank.

"We plan to issue renminbi equities when the time is appropriate," said Johnston.

Commerzbank received a business license under the qualified foreign institutional investors program in 2004, with a quota of $75 million, according to the State Administration of Foreign Exchange.

"The bank's QFII business has been steadily growing all these years, with increasing interest from our clients," said Johnston

Sluggish global economic growth and the deepening eurozone crisis are adding challenges for Sino-EU trade, which may influence the bank's profits from the cross-border trading service business, according to the managers.

"The actual situation is not as bad as the market's expectation," said Kotzbauer.

Economists from the bank forecast that China's GDP growth may slow to 7.5 percent this year, compared with last year's 9.2 percent.

Kotzbauer retains confidence in the Chinese government's policy adjustments. "China will continue to be one of the key markets for companies from Europe and other regions," he said.

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