The Strategy of the Paris Financial Center
Today, Paris EUROPLACE is stepping up its action to confirm its role as a platform for trade and financial transactions in RMB, not only for continental Europe but also in the context of relations between China and Africa.
- a strengthening and expansion of the demand for RMB services from trade settlement to investment and financing services,
- the development of bilateral trade between France and China: French and Chinese corporations increasingly recognize benefits to transacting in RMB not only to settle trade but also for financing and investment purposes.
Key Facts and Trends
- More than 40% of payments between France and China is now denominated in RMB and the estimated trade and services denominated in RMB between both countries are 20%.
Furthermore, there is added growth potential given the strong ties uniting the two countries: China is the number three destination for French exports (outside of Europe) and France's second-largest supplier.
- France in China: the overall stock of French investment in China is around EUR 16.7 bn. Around 1,200 French businesses employing 500,000 people are established in China.
- China in France: the overall stock of Chinese investment in France (Mainland + Hong Kong) is around EUR 4.2 bn. Around 150 Chinese subsidiaries and 50 Hong-Kong subsidiaries are established in France. They employ around 12 000 people.
France is the first destination in the Eurozone for Chinese investments and contracts
Paris is already a Major RMB Center, offering Multiple Banking Services
- Account Services, cross-border RMB transfers and banking services: RMB deposits in Paris amount to RMB20 bn. French and Chinese banks have considerably diversified their banking service offerings in RMB to provide solutions aimed at supporting businesses, including SMEs and mid-caps: trade finance, opening of bank accounts, capital transactions…
- RMB Bonds Issuance
French corporate - Air Liquide, Total, Renault, Veolia and Alstom - as well as French banks - BNP Paribas, Société Générale, Crédit Agricole - are among the European largest issuers of Dim Sum bonds, with RMB10 billion issued over the last 5 years mostly through Euroclear France.
Many French issuers have amended their debt issuance programs to include a RMB option to rapidly issue securities.
On the other side, Paris is becoming an active RMB debt issuance center as Bank of China Paris Branch (RMB2bn) and BPCE (RMB750mn) issued recently offshore RMB bonds listed on the regulated Euronext market. Also, CADES (a French fund established to redeem French social debt) issued one of the largest ever offshore CNY bond offering from a sovereign/state agency issuer for an amount of RMB3bn early 2015. The bond is also listed on Euronext.
Bank of China’s Paris Branch Issued an Offshore CNY Bond called “Arc de Triomphe”
CADES Offshore CNY Bond, one of the largest ever offshore CNY bond offering from a sovereign/state agency issuer
Major Initiatives have already taken place on both sides
- Signature of a Memorandum of Understanding between the People's Bank of China and Banque de France end of June 2014, to set up a Renminbi payment system in Paris. This MoU is the first step towards the creation of a Paris-based renminbi clearing and settlement system. Bank of China has been designated as the clearing and settlement bank in Paris.
- China – France RQFII & QDII Agreements
RQFII (RMB Qualified Foreign Institutional Investors) Quota Agreement for RMB 80 billion (the first quota to be granted in the euro area). In 2014, two French asset managers (first Eurozone investors), BNP Paribas Investment Partners and Carmignac Gestion, have been granted the RQFII license. And, more recently in June 2015, Lyxor also benefited a RMB 6bn quota, the most important one allocated so far in France and Europe.
Letter of intent/QDII (Qualified Domestic Institutional Investors) Quota Agreement between the French Financial Markets Authority (AMF) and the China Banking Regulatory Commission (CBRC). The agreement concerns Chinese commercial banks looking to invest in fixed-rate products (UCITS and shares listed on authorized markets) registered with the AMF,
- A FX swap agreement has been signed between the European Central Bank and the People’s Bank of China in October 2013. It will provide a strong backstop liquidity facility to banks established in the euro area in case of malfunctioning of the market.
Banque de France has actively supported the discussion and establishment of such a swap
This should provide a useful safety net to credit institutions established In Paris which already play a leading role in providing RMB services in the euro area and which will have the possibility to access it through Banque de France. It should facilitate further the development of the range of services they provide.
Overview of Cross-Border RMB Centres in Europe