Chinese authorities will select an initial group of between
eight and 10 banks to participate in a trial version of a new
cross-border lending program in Shenzhen's Qianhai Bay development
zone, the state-run China Securities Journal reported Wednesday,
citing an unnamed official from Qianhai.
The participating banks include China Merchants Bank Co.
(3968.HK), China Construction Bank Corp. (0939.HK), Standard
Chartered PLC (2888.HK), Hang Seng Bank Ltd. (0011.HK), HSBC
Holdings PLC (HBC), Bank of East Asia Ltd. (0023.HK), Industrial
& Commercial Bank of China Ltd. (1398.HK), and Bank of China
Ltd. (3988.HK), the report said.
Under the program, companies registered in Qianhai--a special
business zone being jointly developed by Shenzhen and Hong
Kong--and have operations or investment there will be allowed to
borrow yuan from Hong Kong banks.
The borrowing will be settled through banks in Shenzhen and the
duration of the loans and the interest rate will be decided jointly
by borrowers and lenders.
The program will help increase the circulation of yuan currently
sitting offshore in Hong Kong, and give banks a more profitable way
of deploying their holdings of the Chinese currency.
China restricts flows of yuan funds back into the country,
leaving Hong Kong's lenders with limited investment options.
Write to djnews.shanghai@dowjones.com
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