Banking prepared to offer services in renminbi in Portuguese-speaking Africa

8 September 2016

The internationalisation of China’s currency, the renminbi, in cross-border trade in which Macau will serve as a clearing platform, has been anticipated by Portuguese and Chinese banks, offering a range of services in Chinese currency to companies in the Portuguese-speaking countries.

The use of Macau as a platform along with Shanghai’s financial centre, to encourage cooperation between China and Portuguese-speaking countries was the subject of a conference organised by the state-owned Portuguese bank Caixa Geral de Depósitos (CGD), which on 5 September in Lisbon brought together the financial authorities of the two Chinese regions, as well as financial and legal sector executives.

Emidio Pinheiro, chief executive of CGD said that the public bank is “well placed to give practical meaning” to promoting China’s financial exchanges with the Portuguese-speaking world, as it has a branch in Macau, Banco Nacional Ultramarino (BNU), an office in Shanghai and a presence in seven of the nine Portuguese-speaking countries.

Pedro Cardoso, BNU’s CEO, stressed that the relationship between China and the Portuguese-speaking countries “has evolved very quickly” and that despite the “ongoing correction” in trade due to commodity prices, Chinese investment in these countries remains “very relevant”, some of which has passed through Macau such as David Chow’s hotel and casino complex in Cabo Verde (Cape Verde), valued at US$300 million.

In Macau, where it issues the pataca, the BNU has 220,000 customers, about a third of the population and in 2015 its revenue more than doubled compared to 2012.

Since 2009, the BNU has offered services in renminbi (RMB), including credit cards, debit cards and deposits, focusing on importers and exporters with a close relationship with China, which it offers in Portugal, Mozambique, Angola, Cabo Verde and Timor -Leste (East Timor) Cardoso said.

The Bank of China also offers an integrated cross-border RMB clearing service, which also includes deposits in RMB abroad, loans and various financial products in the Chinese currency.

Its agency in Macau, given the boost in relations between China and the Portuguese-speaking world, intends to play an important role in RMB internationalisation, as it is present in Brazil, Angola and Portugal, and has a support office for trade with Portuguese-speaking countries acting in partnership with Caixa Geral de Depósitos.

In November 2015, the IMF officially approved the inclusion of the RMB in its currency basket, with a weight of 10.92%, after the dollar and euro. This was an important milestone in the process of internationalisation of the Chinese currency, which is expected to experience a new impetus in its use with the “One Belt, One Road” initiative.

The Lisbon conference was attended by Anselmo Teng, chairman of the Macau Monetary Authority, which stressed that the MSAR is establishing an RMB clearing platform between China and Portugal, “and may support internationalisation procedures” of the Chinese currency and the “provision of facilities to clear economic and trade transactions in RMB between China and the Portuguese-speaking countries.”

Potential development in the cross-border use of RMB between China and Portuguese-speaking countries is very broad, given the current level of trade of more than US$98 billion in 2015, said Teng.

Zheng Yang, director of the Shanghai Municipal Financial Services Authority said it intended to promote new financial products and international payments in RMB, “to strengthen cross-border use and develop offshore business in that currency, in what could be “a new factor for economic growth in Portugal.”

Another objective, he said, is to promote financial cooperation between Portuguese-speaking countries, with financial institutions in Portugal and Macau able to take advantage of the language to increase trade between China and Portuguese-speaking countries.

“Portugal is China’s most important business partner in the European Union, having almost served as the first stop for Shanghai’s financial institutions on their investment path abroad,” Zheng said, noting the Chinese groups that have invested in the Portuguese financial (Haitong) and insurance (Fosun) sectors and said he hoped more Portuguese financial institutions would set themselves up in Shanghai. (macauhub/CN/MO/PT)