ICBC Singapore clears Asia's first RMB transaction on newly-launched CIPS

THE Industrial and Commercial Bank of China (ICBC) Singapore has cleared a yuan transaction on Thursday under China's long-anticipated international payment system.

ICBC Singapore said that it successfully cleared 35 million yuan (S$7.8 million) on the Crossborder Interbank Payment System (CIPS), China's international payment system which went live on Thursday.

It was for a trade settlement payment from Singapore's Raffemet Pte Ltd to Baosteel Resources in Shanghai, China and the transaction marks the first in Asia to be cleared through the newly launched CIPS, the bank said.

The CIPS will process a broad range of cross-border renminbi transactions, including the settlement of renminbi trade and capital projects, as well as the settlement of remittance transactions, it said.

In line with working hours in China, the system will operate from 9am to 8pm (GMT+8), representing an extension of three hours from the existing China's National Advanced Payment System.

China's central bank launched the CIPS as a global payments platform for the yuan to facilitate trade settlement and investment dominated in the yuan. It replaces a patchwork of existing networks that make processing renminbi (RMB) payments a more cumbersome process, said a Reuters report earlier.

"The launch of CIPS represents a turning point in the internationalisation of the yuan. As the yuan continues to rise as a popular choice among world payment currencies, CIPS will accelerate global use of the currency, with extended operational hours and greater efficiency," said Zhang Weiwu, ICBC Singapore general manager.

"As the RMB bank of choice in Singapore, this is a welcome development and an excellent time to leverage Singapore's strengths as an offshore RMB hub, and to help financial institutions and corporates capture more opportunities in the flourishing offshore RMB market," he said.

ICBC Singapore has recorded a clearing volume of 47.1 trillion yuan in the first three quarters of 2015, an increase of nearly 97.1 per cent from the same period last year. The bank recently launched round-the-clock renminbi clearing services.

With its participation in the CIPS network, ICBC Singapore said that it will play an instrumental role in widening the transactions channel and elevating the city's appeal to financial institutions and corporates worldwide.