Global RMB Services

to Financial Institutions

On-shore, Off-shore & Cross-border

RMB Clearing, Securities Investment & Bond Issuance

CHU Furong Executive Manager

Financial Institutions Department Head Office

September 2015 Vienna

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Cross-border Investment into Onshore Markets

Global RMB Clearing and Account Services

Introduction

CNH and CNY Bond Issuances

3

Introduction

Bank of China’s Global RMB Services

Since the Chinese currency, known as Renminbi and short-formed for RMB started going global with China’s growing trade and investment abroad, Bank of China has been the leader in providing global financial institutions with a expanding spectrum of RMB services inside and beyond the borders of China.

With its global presence, the largest RMB clearing and settlement network and a strong capital market underwriting/distribution capacity, Bank of China offers a RMB service platform that covers clearing, trade settlement, custodian, securities investment and bond issuance in both CNH and CNY.

RMB has been rapidly going global, accepted widely as a currency for trade settlement, investment and national reserve.

China has removed all barriers concerning the use of RMB in import/export settlement and clearing.

China is moving fast toward market liberalization, making its on-shore capital market more accessible and investable, and its currency more convertible for the purpose of securities investment.

Emerging and deepening CNH markets are taking shape in several financial hubs around the globe, making off-shore RMB trading and circulation an integral part of global financial markets activities.

With RMB to be accepted as a SDR component and Chinese securities included into major global market indices, Chinese assets now make a significant category for global commercial and sovereign investors.

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Why RMB?

Introduction

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RMB Currency Swap Agreements

UAE, 35bn

South Korea, 360bn

New Zealand, 25bn

Pakistan, 10bn

Iceland, 3.5bn

Belarus, 20 bn

Hong Kong, 400bn

Thailand, 70bn

Malaysia, 180bn

Indonesia, 100bn Singapore, 300bn

Mongolia, 10bn Kazakhstan, 7bn

Uzbekistan, 0.7bn

Argentina, 70bn

Turkey, 10bn

Australia, 200bn

Brazil, 190bn

Britain, 200bn

Hungary, 10bn Ukraine, 15bn

Albania, 2 bn

Switzerland, 200bn

Bilateral Currency Swap Agreements with 32 countries/regions in over RMB 3.1 trillion.

Agreements on Border Trade Settlement in Local Currencies with 8 countries/regions.

Agreements on General Trade Settlement in Local Currencies with Belarus and Russia.

Suriname, 1bn

Chile, 22bn

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RMB as an International Currency

The world’s 2nd currency in trade finance

The world’s 5th currency in payment

The world’s 6th currency in FX trading

* As of end of 2014, according to SWIFT.

History & Network

• The first modern bank in China’s history

• Had been the only bank in China running international and cross-border businesses for decades

• With the widest presence covering major financial centers in the world Global RMB Solutions • A leader in cross-border RMB settlement with over 30% market share • Maintaining more RMB correspondent bank accounts than any other

service provider Investor Services • The earliest to serve foreign investors, with the largest market share in

execution and settlement services for foreign investors • Largest custodian for QFII/RQFII investors and sole appointed clearer

for SH-HK Stock Connect program

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Why BOC?

Introduction

Bank of China │ Global RMB Solution

BOCI Securities

BOC

Mainland Hong Kong International

BOC Fund Management

BOC (HK)

BOC International

Holdings

Bank of China Global Network

BOCI (UK/US/Singapore)

BOCI-Prudential Asset Management

RMB Funds Offering & Distribution

CNH Trading & Cash Management

RMB UCITS Fund

Global RMB Clearing

CNH Bond Underwriting & Trading

CNH Trading & Cash Management RMB Clearing

RMB Trade Settlement

QFII/RQFII Custodian

QFII/RQFII Brokerage

Equity/Fixed Income Research, Trading & Asset

Management

China Interbank Bond Market Access & Trading

“Dim Sum” Bonds Underwriting & Trading

Global RMB Services

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Introduction

Bank of China’s Financial Institutions Group (“FIG”)

The FIG at Bank of China is responsible for the Bank’s global client relationship management dedicated to the Financial Institution (“FI”) clients, including banks (including Central Banks and Monetary Authority) and non-bank FIs, such as, Sovereign Wealth Funds, Insurance Companies, Securities Companies, Asset/Fund Management Companies, and International Financial Organizations.

The FIG comprises the Financial Institutions Department at Head Office, as the central managerial body, and all the FI departments and teams based with the Bank’s domestic and overseas branches/subsidiaries.

The FIG now globally has a staff team of over 200 globally, and covers major global and regional financial hubs. FIG is committed to be the access point for global financial institutions to Bank of China’s RMB Services Platform.

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Bank of China FIG

RMB Trade

Settlement

RMB Clearing

RMB Securities

Investment

RMB Trading

BOC

FIG

FI

Clients

Corporates

Individuals

Bank of China FIG acts as the access point of global FI clients to the Bank’s Global RMB Services Platform, enabling FI clients to serve their own corporate and individual customers with RMB products backed by Bank of China’s infrastructure.

RMB Bond

Issuance

11

Cross-border Investment into Onshore Markets

Global RMB Clearing and Account Services

Introduction

CNH and CNY Bond Issuances

12

Global RMB Clearing Network

Qatar

South Korea

Macao

Taiwan, 180bn

Singapore

Uzbekistan, 0.7bn

Australia South Africa

UK Hungary

Germany

PBOC has so far appointed in 17 countries/regions a RMB Clear Bank, and Bank of China granted such status in 9 of them.

In places where Bank of China was not an officially appointed clearing bank, the Bank in most occasions still holds the largest market share in RMB clearing

Bank of China has the world’s largest commercial clearing network for RMB.

Canada

France

Chile

Luxembourg

Hong Kong

Malaysia Chile Thailand

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Leading Position in RMB Clearing

Cross-border

RMB Clearing (as of the end of May, 2015)

RMB Clearing

Accounts (as of the end of June, 2015)

Offshore RMB

Clearing Bank (as of the end of July, 2015)

120.6 trillion yuan (with an annual increase of 30.4%)

World’s largest cross-border RMB Clearing Bank

1411 RMB clearing accounts for financial institutions

418 on-shore RMB correspondent clearing accounts

PBOC-appointed RMB clearing banks in Hong Kong, Macao, Taiwan,

Germany, France, Australia, Malaysia, Hungary, South Africa and

Designated RMB Market Maker in Russia

“RMB Business Clearing Award in Asia-Pacific Region” from Asian

Banker for five consecutive years from 2010 to 2014

Bank of China clears more cross-border payments, maintains more on-shore correspondent accounts and more off-shore RMB clearing accounts than any other service provider in the world.

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3 ways to

get

connected!

Maintain an on-shore account with BOC

Maintain an Off-shore RMB clearing

account with your nearest BOC branch or

subsidiary

Clearing Accounts with BOC

Maintain an RMB Account with any of

BOC’s appointed RMB Clearing Banks

Seamless

Connection. Same

Speed. Assured

Service Quality

Bank of China offers wide range of options for maintaining RMB Clearing Accounts and utilizing BOC as a clearing service provider.

However our clients may choose to get connected with BOC for RMB clearing, Bank of China ensures equal high-efficiency and service satisfaction.

①

②

③

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Cross-border Investment into Onshore Markets

Global RMB Clearing and Account Services

Introduction

CNH and CNY Bond Issuances

16

Appoint an Agent/Custodian Bank

(Bank of China)

Equity Market Bond Market

Investors

Securities Markets Open Up

Financial

Futures Market

China has opened to global investors its securities markets covering equity, bond and newly launched financial derivatives. While various restrictions were put in place to limit the capital flows and currency convertibility, such restrictions are being phased out as China moves toward full market liberalization.

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Accessibility and BOC’s Role

Options Equity Ex-traded Bonds

CIBM Derivatives BOC’s Role

QFII/RQFII* √ √ √ √ Custodian/ Broker/Investment

Management

CIBM** Qualified Investor Program

√ Settlement Agent/ Counterparty/

Advisory

Stock Connect √ Settlement Bank

China allows overseas investors to access its different segments of capital market through expanding options.

Bank of China plays a significant role in each option as a facilitator and service provider.

* QFII/RQFII – (RMB) Qualified Foreign Institutional Investor, a scheme introduced to allow overseas institutional investor to access China’s exchange markets and CIBM. ** CIBM – China Interbank Bond Market, a segment representing over 95% of China’s bond market.

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International

Investors

5 DRs, representing 5 different A shares

An Alternative: DR & ETF on CEIEx

An ETF tracking SSE50 index

Shanghai

Stock

Exchange

Shanghai Stock Exchange, China Financial Futures Exchange and Deutsche Borse Group will form a JV exchange in Germany, namely, China Europe International Exchange (“CEIEx”).

The CEIEx will offer to international investors, among a series of China-themed products, Depository Receipts (DR) on Chinese A-shares, and an ETF tracking SSE50 index.

CNH

CNH

SH-HK Stock Connect

Onshore Offshore

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Currency Flows

RMB

Account

Exchanges

&

CIBM Investors

CNH CNY

Onshore Offshore

CNY

Exchanges

&

CIBM Investors

CNH CNY CNY RMB

Account

Inbound

Outbound

On Bank of China’s book

BOC Overseas Network

as the CNH Liquidity

Provider

BOC as Custodian/Broker/

Settlement Agent

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A Recent Move: CIBM De-regulation

Before After

Regulation Approval-based Registration-based

Principal Limit Quota No Limit

Instruments Cash Bond

Cash Bond, Bond Repurchase, Securities Lending, Bond Forward, Interest-rate Swap, Forward Rate Agreement and Other Products Approved by PBOC

Trade Execution and Settlement Agent

Compulsory (through PBOC)

Market-based and service-driven Choice: PBOC or any of the Designated Commercial Banks

PBOC’s July 2015 Notice: Easier Access to CIBM by Central Banks, Sovereign Wealth Funds and International Financial Organizations.

* PBOC - People’s Bank of China, China’s central bank

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Cross-border Investment into Onshore Markets

Global RMB Clearing and Account Services

Introduction

CNH and CNY Bond Issuances

BOC Head Office

Mainland Hong Kong/

Taiwan International

BOC (HK)

HK/Taipei

Branch

Bank of China Global Network

Luxembourg (“Schengen Bond”)

Singapore (“Lion City Bond”) On-shore RMB Bonds by International Issuers

(“Panda Bond”)

CNH Bonds in HK (“Dim Sum Bond ”)

International DCM Platform

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Australia (“Oceanic Bond”)

France (“Triomphe Bond”)

CNH Bonds in Taiwan (“Island Bond ”)

Malaysia (“Tiger Emas Bond”)

As of end of 2014, international issuers had offered off-shore (CNH) bonds in a total of 530 bn yuan, and on-shore (CNY) bonds (“Panda Bonds”) in 4.63 bn yuan.

Bank of China’s global Debt Capital Teams underwrite and distribute RMB-denominated bonds for international issuers in both off-shore and on-shore markets.

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Major CNH Bond Deals by BOC

Bank of China leads all other Chinese banks in CNH Bond underwriting, with a particular recognition from global sovereign issuers.

UK Ministry of Finance

RMB 3 bn

Joint Lead Underwriter

2014

CADES

(France)

RMB 3 bn

Joint Lead Underwriter

2015

British Columbia Province

(Canada)

RMB 2.5 bn

Joint Lead Underwriter

2013

Cagamas Berhad

(Malaysia)

RMB 1.5 bn

Joint Lead Underwriter

2014

New South Wales

(Australia)

RMB 1 bn

Joint Lead Underwriter

2014

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Panda Bond Deals by BOC

Bank of China has underwritten more “Panda Bonds” than any other bank, and its sophisticated team will hand-hold issuers to navigate the regulatory and issuing process in the Mainland China.

RMB 1.13 bn

Joint Lead Underwriter

2005

Asia Development Bank

RMB 1 bn

Joint Lead Underwriter

2005

RMB 870 mn

Joint Lead Underwriter

2014

Asia Development Bank

RMB 1 bn

Joint Lead Underwriter

2009

Daimlar AG

RMB 500 mn (1st non-financial

“Panda Bond” issuer)

Sole Underwriter

2014

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Thank you!

(Night View of Bank of China Head Office Building, Beijing)