Citibank Taiwan (台灣花旗) is geared to tap into yuan-linked business opportunities as Taiwan and China work out currency clearing and settlement rules, senior executives said yesterday.
The lender can immediately extend its yuan-based products and services — presently limited to its corporate customers through its offshore banking unit (OBU) — to the onshore market once monetary authorities give their go-ahead, Citibank Taiwan chairman Victor Kuan (管國霖) said.
The central bank and the Financial Supervisory Commission are pulling out all the stops to build the nation into a second offshore yuan business center, after Hong Kong, as the Chinese currency gains increasing weight in global trade.
“Taiwan has great potential to become another offshore yuan hub aided by capital and trade settlement needs,” Kuan said.
“The development may be evident in three to five years,” he said.
Cross-strait trade totals more than NT100 billion (US$3.41 billion) a year. Currently, yuan and New Taiwan dollar settlements are conducted through Hong Kong, where the Bank of China (Hong Kong) (中國銀行) offers yuan cash-settlement services to the Hong Kong branches of state-run Bank of Taiwan (台灣銀行) and Mega International Commercial Bank (兆豐國際商銀).
The regulators should learn from Hong Kong in dealing with regulatory easing so whatever customers can do with yuan there — be it yuan-denominated deposits, savings, remittances, bonds and other financial products and services — can also be done in Taiwan, Kuan said.
To date, China has not appointed a clearing intermediary after signing a memorandum of understanding (MOU) over a currency clearing agreement at the end of August. The Bank of Taiwan’s Shanghai branch will be in charge of New Taiwan dollar supply and reflux on the Taiwan side. The MOU is to take effect within 60 days.
Head of Citibank Taiwan’s retail banking business Kevin Hu (胡醒賢) said the bank is ready to offer yuan-based products and services once the clearing-and-settlement mechanism is in place, whereas most other banks may need some time to prepare to offer these services.
The foreign lender also plans to expand its investment product line for affluent customers later this month to include funds presently limited to institutional clients, Hu said.
The minimum investment threshold has been lowered from US$500,000 to US$100,000 to strengthen services in this segment, he added.
Also to that end, Citibank yesterday celebrated the relocation of its Taoyuan branch to a more popular district and the inauguration of its latest private banking facility in the city.