Three banks to offer yuan accounts to non-residents

Three lenders will offer yuan services for non-residents from today as part of a move to expand their business in that currency, after yuan trade settlements rose to a record high in June.

Yuan trade settlements handled by local lenders reached a record of 241 billion yuan (HK$295.48 billion), up 8 per cent from May, according to Hong Kong Monetary Authority (HKMA) data released yesterday.

Yuan deposits in the city also rose to their highest level in four months in June, to 557.7 billion yuan, up 0.7 per cent from May but still down 11 per cent from the peak in November.

HSBC, Hang Seng Bank and Bank of China (Hong Kong) will start offering non-residents yuan accounts and yuan exchange and credit card services today. The HKMA said last week non-residents would now be able to do so, as it wants to attract overseas investors to trade yuan products here.

'China and the HKMA have kept on relaxing the rules regarding yuan businesses, which has strengthened Hong Kong as an offshore yuan trading centre. This provides new opportunities and a good, profitable business for banks,' said Anita Fung, chief executive of HSBC Hong Kong.

'The yuan now settles 10 per cent of global trade and will grow further to become the world's second trade settlement currency.'

The yuan is not yet fully convertible, but Beijing has gradually relaxed rules since 2009 to encourage the use of the currency to settle trade and and for investment globally.

Hang Seng Bank vice-chairwoman and chief executive Rose Lee Wai-mun also said her bank would offer yuan services for non-residents today and that it would expand its yuan business further.

'Yuan loans now represent only about 1 per cent of all loans made in Hong Kong, but the growth potential is huge,' Lee (pictured) said.

The share price of Hang Seng, which announced on Monday a 14 per cent jump in profit, rose to HK$107.90 yesterday, up 0.3 per cent from the previous day.

A research report from BNP said the bank expects Hang Seng Bank to maintain or slightly increase its growth but warned 'the key risk to our buy call remains a rapid deterioration of asset quality scenario'.

Hang Seng's bad debts rose 57.6 per cent to HK$249 million in the first half, but Lee said the problem is restricted only to certain industries.

'We have adopted a cautious approach and will not lend to risky industries, such as shipping,' she said.

Lee is a former China adviser at HSBC. She took over the helm at Hang Seng from Margaret Leung Ko May-yee in May.