Standard Chartered Bank sees Pakistan, China to boost use of yuan in trade deals

KARACHI: Standard Chartered Bank said on Thursday it sees greater opportunities to use yuan for settling cross-border trade deals between Pakistan and China because of its strong footprint in the country.

“The trade levels are significant between Pakistan and China with the figures varying from $7 billion to $11 billion with respect to both these markets,” AD Ganesh, Standard Chartered Bank’s regional head for commercial banking told The News in an interview. “Renminbi (RMB) is definitely an opportunity and a way forward as we are uniquely positioned in China.”

Ganesh said the bank is equipped and ready to implement RMB, whether it’s on accounts or in providing fund transfers.

“Only certain mechanics need to be worked upon that would enable us to drive this initiative further.”

The bank said the $57 billion China-Pakistan Economic Corridor (CEPEC) -- part of the Chinese One Belt, One Road initiative -- could bolster its commercial banking business across the two markets.

“This (CEPEC] is a key initiative for both Pakistan and China. We have major sectors in focus such as energy, infrastructure and logistics in CPEC… with already a presence in China and the only international presence in Pakistan, we offer unparalleled network coverage to our clients,” Ganesh said.

“It works in a way that as we have contractors in China who are already banking with us and would like to setup a footprint in Pakistan then we could link up the value chain.”

The bank is also hiring mandarin speaking relationship mangers based in China who would exclusively be focusing on this initiative.

Regional head for commercial banking said the bank’s focus will be on

providing increased financing capabilities to middle market clients in both the countries.

The bulk of the CPEC funding is being raised by the Chinese companies that come in as equity into Pakistan.

However, the local financial institutions are also participating in the Chinese-led consortium to finance a number of power and infrastructure projects under the economic corridor.

When the projects start off at the special economic zones in Gawadar, there would be a lot of subcontracting that could be done.

The bank expects to provide loan offerings to the subcontractors from its commercial banking division.

The Standard Chartered’s regionally focused commercial banking division targets mid-corporates, or businesses with $10 million to $1.5 billion in annual revenues.

“We see good opportunities from commercial banking clients in Pakistan, which generate medium-sized businesses, we expect long-term growth and profits from them,” Ganesh said.  

China has been promoting the international use of the yuan since 2009, and yuan settlement accounted for 16.9 percent of China’s total goods trade in 2016.