Asia United Bank (AUB) said Thursday, Dec. 21, that it is planning to increase its Chinese renminbi (RMB) foreign exchange (FX/forex) trading to expand its market share in the global payments and cross-border transactions.
AUB Head of Treasury Antonio V. Agcaoili Jr. said in a statement that the bank, already a market leader here, will continue to keep its top rank as the go-to bank in RMB trading.
“We assure you that we can sustain, and probably even improve on the nearly 300% year-on-year growth on (RMB-PHP) clearing volumes and 70% growth in FX trading volume in the coming years. We have no plans of relinquishing our rank as the Top Bank in these categories,” he said.
Agcaoili said that when the peso-RMB sector was started in 2018 in the country, the bank took an “aggressive competitive stance” in order to “dominate the industry in this segment of the market.”
“It is a testament to our belief that our ability to compete does not necessarily boil down to a bank’s asset size or the geographical reach of its branch network. Our rank as a mid-size universal bank should not hinder our aim to achieve the efficiency and effectiveness required to deliver value-added banking products and services to our clients,” he said.
According to AUB, in 2021 to 2022, it grew its RMB clearing item count by 134 percent while volume increased by 295 percent. For its RMB FX, item count increased by 32 percent while volume jumped by 67 percent.
Agcaoili attributed AUB’s success in RMB trading to pricing, execution, and “good, old relationship management.”
AUB has Proprietary Trading Desk that is headed by a professional trader. It also has a “highly proactive and responsive IT team that developed most of its frontline platforms in-house, which led to the flexibility and scalability of its IT infrastructure.”
Agcaoili noted that its front-end system includes a fully automated Straight-Thru-Processing (STP) payment platform that is “almost flawless” and could process up to 99 percent of transactions “in an error-free manner and consistently over an extended period.”
The bank also invested on relationship management that focused on preaching the benefits of maintaining both the peso and RMB deposit accounts as “settlement accounts” for all clients’ forex trades and other transactional needs. “These three pillars were instrumental in achieving the goals we set for ourselves early in the game to gain a significant share of the RMB-PHP market,” said Agcaoili.
AUB said in the first six months of 2023, China accounted for 16 percent of the country’s total exports.
Joey R. Jacob, AUB senior vice president and head of its Foreign Exchange Desk, said: “While the fundamental side shows a slow export recovery (in China) amidst global weakening trends, it is at least improving. Thus, the most optimistic scenario for the RMB versus PHP is to test 8.10 to 8.16 level next year. The People’s Bank of China is expected to mitigate the recent Moody's downgrade of its rating outlook (on China and) has been consistently supporting the RMB at daily fixing. This is sending a strong message to support the yuan whatever it takes.”
Earlier this month, AUB won the “Top RMB Clearing Volume Award” and “Top RMBPHP Trading Volume Award” from the Philippine RMB Trading Community.
In 2018, the peso-RMB trading facility was set up by an initial 14 banks to reduce exchange rate volatility and to offer an alternative currency other than the US dollar.
At the time, the Bangko Sentral ng Pilipinas (BSP) was hoping that the peso-RMB trading facility will serve to diversify currency options in the local FX market.
In 2016, the BSP approved the RMB as one of the official currencies in the country’s gross international reserves which continues to be predominantly in US dollar. It was included after the RMB was also rostered in the International Monetary Fund’s special drawing rights reserve as a fifth currency, after the US dollar, the euro, the Japanese yen and the British pound.