Bank of China to raise RMB capital of Frankfurt branch

Bank of China, one of China's biggest commercial banks, decided to raise renminbi capital of its Frankfurt branch, in a move to strengthen its competitiveness in offshore business of Chinese currency renminbi (RMB), said the bank on Wednesday.

Capital of Bank of China in Frankfurt would be boosted by one billion yuan (about $162.49 million), said the bank in Berlin. This was the biggest capital increase in Chinese currency ever since by Chinese banks operating in the euro zone, according to the bank.

It said the capital increase aimed at increasing its Frankfurt branch's strength and ability for RMB business services.

"It is a key measure intended to follow the internationalization trend of RMB and to promote cross-border RMB business," said Li Guang, Managing Director of Bank of China Frankfurt Branch.

In March, China and Germany signed a memorandum of understating on establishing a RMB clearing and settlement mechanism in Frankfurt, moving the German city closer to becoming an offshore RMB center.

Bank of China, which opened its branch in Frankfurt in 1989 as the first Chinese bank in Germany, is competing with its Chinese peers for being the clearance bank for RMB in the German financial hub.

Offshore RMB payment in Europe is growing faster than in Asia, recent data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) showed.

"Our business intelligence indicates that China's major trade partners in Europe are now embracing the RMB for trade settlement," said Patrick de Courcy, Deputy Chief Executive of SWIFT, in a statement in October last year.

According to SWIFT, RMB now ranks as the seventh most-used global payments currency. In March, RMB accounted for 1.63 percent of global payments.