Britain Aims to Ease Way for Chinese Banks in London

LONDON - The British government announced a plan on Tuesday that was intended to make it easier for Chinese banks to do business in London as part of an expanded effort to make the city a global center for investing and trading China’s currency.

On a five-day trade mission to China, Chancellor George Osborne of Britain said the country’s Prudential Regulation Authority would shortly begin discussions to allow Chinese banks to open wholesale branches, rather than subsidiaries, for this first time in Britain.

By opening branches, a Chinese bank will be able to use its parent company’s capital to meet British rules for reserves and other financial requirements. British officials hope it will spur Chinese investment here.

The five largest banks in China already have subsidiaries in Britain.

Mr. Osborne also announced that investors in London would now be able to apply for a license to invest directly in Chinese shares and bonds in the Chinese currency, the renminbi. It will be the first Western country to have such an agreement, the British government said.

In the past, investors had to go through a counterparty in Hong Kong to invest in Chinese stocks and bonds, which could carry a higher cost. The initial quota for London trades will be set at 80 billion renminbi ($13.1 billion).

“Today we agreed the next big step in making London - already the global center for finance - a major global center for trading and now investing the Chinese currency too,” Mr. Osborne said. “More trade and more investment, means more business and more jobs for Britain.”

Vice Premier Ma Kai, who was China’s counterpart to Mr. Osborne in the economic talks in Beijing on Tuesday, told him that China wanted to “deepen cooperation in the financial sphere and enhance coordination in major international financial matters,” the China News Service reported.

Prior agreements between the countries paved the way for London to become a Western hub for trading of the renminbi.

Britain now accounts for 62 percent of global renminbi trading outside of China and Hong Kong and 28 percent of all international renminbi payments, according to the British government.

Christopher Buckley contributed reporting from China.