State-run Bank of China has told the Swiss Bank UBS and BNP Paribas SA, the largest global banking group in the world and located in Paris, that it won‘t trade with them in China’s local derivatives markets, a move that comes amid broader investor concerns over Europe‘s debt troubles.
The move is likely to have only a muted financial impact on the banks. Bank of China is a minor player in global funding markets, and the Europeans banks will still likely be able to access liquidity needed within China from other lenders and participants in the interbank market. However, it shows the uncertainty surrounding global funding markets presents an image problem for the banks.
Bank of China told UBS and BNP Paribas that they reached the limits of their trading credit lines with the bank. It was not clear Tuesday how large the credit lines were. The lender notified the banks about its decision last week, while the halt began Monday, the person said.
Several other European banks said Tuesday that their operations in the China swaps markets continued normally.
The move comes as Beijing’s leaders have offered verbal support for the European Union, saying they have confidence the nations can work through their problems. Last week, at a meeting of the World Economic Forum in the Chinese city of Dalian, China‘s Premier Wen Jiabao offered verbal support.
“China believes the EU will be able to overcome its difficulties and China remains willing to expand its investment in the EU,” Wen said. “We have on many occasions expressed our readiness to extend a helping hand.”
(아주경제 앤드류 이 기자)
The move is likely to have only a muted financial impact on the banks. Bank of China is a minor player in global funding markets, and the Europeans banks will still likely be able to access liquidity needed within China from other lenders and participants in the interbank market. However, it shows the uncertainty surrounding global funding markets presents an image problem for the banks.
Bank of China told UBS and BNP Paribas that they reached the limits of their trading credit lines with the bank. It was not clear Tuesday how large the credit lines were. The lender notified the banks about its decision last week, while the halt began Monday, the person said.
Several other European banks said Tuesday that their operations in the China swaps markets continued normally.
The move comes as Beijing’s leaders have offered verbal support for the European Union, saying they have confidence the nations can work through their problems. Last week, at a meeting of the World Economic Forum in the Chinese city of Dalian, China‘s Premier Wen Jiabao offered verbal support.
“China believes the EU will be able to overcome its difficulties and China remains willing to expand its investment in the EU,” Wen said. “We have on many occasions expressed our readiness to extend a helping hand.”
(아주경제 앤드류 이 기자)
Copyright ⓒ Aju Press All rights reserved.