China Development Bank (CDB), the mainland's premier policy bank for government-directed lending, has opened an office in Hong Kong, the first outside the mainland. The move has been made to raise funds and seek more exposure on international markets. CDB governor Chen Yuan said yesterday that the five-year-old bank still aimed to diversify into investment banking long-term, though the plan had run into regulatory problems. He said CDB would issue bonds internationally next year, following a successful issue in May of US$500 million 10-year global bonds. 'We don't have any plan to issue more bonds in the remainder of this year, but we will next year,' Mr Chen said. He said the Hong Kong office would gather information and liaise with CDB headquarters on bond issues, syndicated loans, foreign exchange settlements and investment banking. By the end of last year, the bank had raised $7.1 billion in foreign exchange since setting up in 1994. Mr Chen, formerly a deputy governor at the mainland's central bank, said foreign banks were still maintaining tight lending policies towards mainland companies, following last October's collapse of Guangdong International Trust and Investment Corp. However, he said he did not expect CDB to have serious difficulty raising money on international markets as the bank's debts were considered quasi-sovereign due to strong support from Beijing. Mr Chen said because of the bank's young age and strict quality controls, its bad loans accounted for only 2 per cent of its 600 billion yuan (about HK$559 billion) worth of outstanding loans. 'So for us, non-performing loans are not a big problem, ' he said. CDB was also talking with Cinda Asset Management to take over some of its bad loans, in particular those lent to companies which also borrowed from China Construction Bank (CCB), he said. Cinda was launched to take over bad loans from CCB. Mr Chen denied an official report that Cinda would take over 100 billion yuan of bad debts from his bank. He said the two sides were still working out the final figures. Last year, it had a net profit of 672 million yuan on revenue of 38.66 billion yuan.