Hongkong Bank is to apply for a licence to do yuan business in Shenzhen following last week's invitation by the People's Bank of China to foreign banks to do so. Chief operating officer for the mainland Eddie Wang said preparation for the move involved the addition of more working capital and staff and renovation of its branch office. Mainland regulations stipulate foreign banks must have a minimum of 100 million yuan (about HK$93.07 million) working capital - recently raised from $30 million - for conducting local currency business. This minimum capital requirement will comprise part of Hongkong Bank's investment. Mr Wang said the bank's Shenzhen branch, which has a staff of 60, would hire 12 to 20 additional people. Shortage of yuan funding remains one of the big difficulties for foreign banks conducting local currency business in Shanghai as they are allowed to absorb yuan deposits only from foreign individuals and sino-foreign joint-venture companies. Mr Wang said ultimately the ability to provide quality and comprehensive services to customers dictated a bank's ability to attract deposits. Hongkong Bank, having been granted the licence, would make building a sizeable customer deposit base its first priority because the move would determine the bank's capacity to lend. He said the bank would submit its application for the licence 'very soon'.