At the end of the day, regulation is an intensely political affair. The UK government’s decision to consider giving Chinese state-owned banks the privilege of operating as branches rather than full-blown subsidiaries is seen by some as creating an unlevel playing field in pursuit of an economic aim. The announcement was made by UK chancellor of the exchequer George Osborne during a trade mission to China.
Clearly, if London wants to be an international centre for the renminbi it needs the Chinese banks to have a stronger presence in the City. Previously, they have indicated that Luxembourg may be a more favourable European location due to a better regulatory climate.
