The Import and Export Bank of China, known as Exim Bank,
announced on Monday that its board of directors has given the bank
a "go-ahead" to issue Renminbi bonds on the Hong Kong market.
This makes Exim Bank the third bank in less than two months to
consider issuing Renminbi bonds in Hong Kong.
The Exim Bank said it was fully prepared for the issuance but
would not disclose specifics.
"Once it is approved by the People's Bank of China, we will
start issuance procedures and file with Hong Kong financial
authorities," an Exim Bank statement said.
The Bank of China announced on May 28 that it plans to issue
Renminbi bonds valued at no more than three billion yuan in Hong
Kong. The plan, however, has to be approved by its shareholders on
June 14, according to China Business News.
One month earlier, the China Construction Bank announced it was
likely to issue Renminbi bonds in Hong Kong valued at five billion
yuan if market conditions were favorable.
Local banks' enthusiasm for Renminbi bond issuance in Hong Kong
was kindled in January by a circular from the People's Bank of
China, which said that mainland financial institutions, once
approved, could issue Renminbi bonds on the Hong Kong market.
However, the capital raised must be handled by Hong Kong clearing
banks.
Another factor piquing mainland banks' interest is the rising
yuan. Although Renminbi bank deposits in Hong Kong stood at only
24.9 billion yuan (around US$3.2 billion) in February, equivalent
to only five percent of non-Renminbi bank deposits, the
appreciation potential of the yuan is regarded by many industrial
analysts as a lure to investors in Hong Kong.
The Hong Kong dollar has been cheaper than the yuan for several
months, with the central parity rate of yuan against Hong Kong
dollar standing at 0.97970 on Monday.
It remains unclear when and how China's central bank will kick
off Renminbi bond issuances in Hong Kong. But Hong Kong Financial
Secretary Henry Tang has said he hopes the administrative
arrangements and legislative procedures for the issuance could be
introduced in the first half of the year.
Established in 1994 and solely owned by the central government,
China Exim Bank is a state export credit agency and an important
element in the backup system for China's foreign trade.
(Xinhua News Agency June 5, 2007)