Citibank (China) Co Ltd said on Thursday it has completed its first cross-border lending transaction in yuan.

In a press release, the bank said the transaction was conducted on behalf of a European food company, and was structured to optimize the company’s treasury activities by leveraging its China operation’s surplus cash.

The lender declined to provide financial details.

The lending to the company’s group treasury center in Singapore is a critical step to expand and include yuan into its treasury management currency basket, it said.

“This also means important progress for the renminbi internationalization by establishing a bigger role for the currency in the multinationals’ treasury management operations globally,” said Yigen Pei, head of Citi transaction services for China.

China’s central bank, the People’s Bank of China, first introduced the renminbi cross-border initiative in July 2009 to provide companies with greater foreign exchange savings and operational efficiencies as well as to promote the internationalization of the currency.

Last November, the Shanghai branch of China Construction Bank Corp conducted the first yuan-denominated cross-border lending transaction, which was valued at 150 million yuan ($23.88 million). The funds were lent by the Chinese subsidiary of the United States-based General Electric Co to its parent company.

That same month, Standard Chartered Bank announced it had submitted applications to Chinese regulators to conduct a similar transaction worth 3.3 billion yuan for a multinational corporate based in the US.

Although such deals are in line with the increasing use of the yuan globally, given the present financing costs, such as the higher interest rates for the yuan compared with the US dollar, it cannot be ruled out that international companies are conducting such transactions to transfer profits and avoid taxes, said Ding Zhijie, dean of the School of Banking and Finance at the University of International Business and Economics.

“Another explanation is that they might be interested in participating in the London offshore yuan market,” Ding said.