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Bank of China supports deepening CEE-China cooperation and development in the financial industry

BoC
By EuroWeek Editor 1
06 Oct 2020

Multi-field cooperation and integration

Since the first summit between China and the 16 countries of Central and Eastern Europe in 2012, the development strategies of the partners have seen deepening integration, with a comprehensive and multi-level cooperation mechanism established in nearly 20 areas.

Financial cooperation has always been an important aspect of “16+1 cooperation”. Ministries of Finance and central banks in CEE have explored changes to their holdings of currency while supporting the internationalization of the Chinese renminbi (RMB). It has helped build up the foundations of deeper development of finance and trade between the CEE countries and China.

Among these developments, the central banks of Hungary, Albania and Serbia have all signed bilateral currency swap deal with the People's Bank of China. Magyar Nemzeti Bank, Narodowy Bank Polski  and Lietuvos Bankas have all tapped in to the China Interbank Bond Market (CIBM) by using the Qualified Foreign Institutional Investor Scheme (QFII), becoming the first institutional investors from CEE. Meanwhile, Poland and Hungary issued Panda bonds in CIBM in 2016, 2017 and 2018. Along with the RMB’s inclusion into the IMF’s Special Drawing Rights basket, the Chinese currency has become an option for diversification of foreign exchange reserves for neighbours and the countries along the Belt and Road. An encouraging sign was that in 2019 Ceska Narodni Banka decided to include RMB in its foreign exchange reserves.


Bank of China adopts structure, products for CEE cooperation

Bank of China took the lead in setting up a subsidiary in Hungary in February 2003. In recent years, Bank of China has actively responded to the implementation of the “Belt and Road” initiative and has now established six branches in Central and Eastern Europe.

In June 2015, Bank of China became the Hungarian RMB clearing bank, the first RMB clearing bank in Central and Eastern Europe. Since then, 16 mainstream banks in six countries in Central and Eastern European have opened RMB settlement accounts at Bank of China and act as RMB participating banks.

Then, in 2016, Bank of China established its DCM Centre (EMEA) to build up its global debt capital markets business. The Centre has been exploring opportunities in the region to support more transactions from its investor base, as well as introducing foreign issuers to the opening of Chinese capital markets.

“Bank of China has maintained its leading position in the Panda bond market for many years, and has taken the lead in assisting countries such as Poland and Hungary to issue Panda bonds, using an international bond underwriting and distribution network covering both onshore and offshore investors,” says Mr Kun Hu, Bank of China Head Office, General Manager of Investment Banking and Asset Management Department. “There is great demand and potential for the use of RMB in investment and trade cooperation between Central and Eastern European countries and China.”

He continues: “We believe that more and more Central and Eastern European countries will participate in CIBM to further expand financing channels and enrich the investor base. Committed to support the framework of the “Belt and Road” and “16+1 cooperation” initiatives, Bank of China will continue to best utilize its global business network and advantages to further promote project financing and further enhance the interconnection between domestic and foreign issuers and investors.”

Bank of China signed the "Belt and Road" Green Investment Principles in April 2019, integrating the concept of green development into the infrastructure construction of countries along the “Belt and Road”. In June 2020, the bank’s Hungarian branch provided a project financing in forint for a 100MW photovoltaic power plant project in Kaposvár, Hungary, which is the largest photovoltaic power plant project in Hungary.

By the end of 2019, Bank of China had participated in more than 600 “Belt and Road” projects, providing more than $160 billion in credit support to countries along the “Belt and Road”. Bank of China has built up its ability to offer quotations in 99 emerging market currencies, of which 46 are of countries along the “Belt and Road”.


Our vision and hope

By providing close-chain product line and services such as corporate loans, deposits, settlement and clearing, and financial markets, Bank of China will continue to provide a bridge between China and the CEE countries, inspiring and promoting deepening cooperation between China and the CEE countries in the financial sector, and working together with local institutions on issues such as sustainability, low-carbon, energy-saving and digitalization.





By EuroWeek Editor 1
06 Oct 2020