Banks get green light for 2b yuan in cross-border loans for Qianhai
Cross-border deals signal relaxation of Beijing's tight controls and offer major opportunities in bid to create 'Manhattan of Pearl River Delta'
Fifteen banks in Hong Kong were granted permission yesterday to offer a combined 2 billion yuan (HK$2.49 billion) in loans to companies in Qianhai to help develop the area into the "Manhattan of the Pearl River Delta".
This is the first time the city's lenders are being allowed to offer cross-border loans in yuan.
It is seen as a relaxation of the mainland's tight capital controls and presents a business opportunity to Hong Kong lenders.
In June, the National Development and Reform Commission identified Qianhai - a 15 square kilometre special zone west of Shenzhen - as a testing ground for the introduction of freer convertibility of the yuan.
Hong Kong banks can offer a wider variety of loans to mainland firms.
And while mainland banks must adhere to official lending rates, the Qianhai scheme allows loan rates to be negotiated between Hong Kong lenders and Qianhai borrowers. Analysts said this flexibility could also be seen as an experiment with the mainland's rate reforms.
The loan plan is the first major milestone to become a reality in the Qianhai development plan. Previous measures failed to gain Beijing's approval.