(Reuters) - China Merchants Securities, one of China's top five investment banks, has been approved by UK regulators to broker listed derivatives as it aims to build up a commodities business in the planned offshore yuan-clearing hub, the bank said.
China Merchants Securities (UK) Limited plans to initially offer commodities risk management services to meet demand within China to hedge global natural resources price risks, while aiding the internationalisation of the yuan, its Chinese parent said in a statement on its website dated June 23.
"It would then gradually extend to become a comprehensive investment bank", focusing on offshore yuan and cross-border initiatives between China and the Europe, Middle East and Africa (EMEA), the bank said.
The bank plans to hedge via the London Metal Exchange (LME) Intercontinental Exchange Europe (ICE), London Bullion Market Association (LBMA), and the London Platinum and Palladium Market (LPPM).
China's Premier Li Keqiang, on his first official trip to Britain since taking office, said last week that Chinese banks will further expand their businesses in Britain, naming China Construction Bank as the first yuan clearing bank in London.
Britain and China signed deals worth more than 14 billion pounds ($23.5 billion) during the visit with energy and finance dominating the trade agenda.
China has relaxed controls over the last five years to establish the yuan as an international currency of trade and reduce its reliance on other currencies, but London is competing with other financial capitals such as Singapore to secure a slice of the fast-growing offshore yuan business.
The yuan is expected to become a leading so-called reserve currency, meaning it will be stockpiled by central banks, and could become fully convertible into other currencies as soon as 2015.
China Merchants Securities has over 100 branches in more than 60 cities in China with over 8,000 staff, serving more than 4 million clients, according to the bank. It is 45.8 pct owned by China Merchants Group.
(Reporting by Melanie Burton in SYDNEY; Editing by Muralikumar Anantharaman)