Foreign banks are keeping their fingers crossed in the hope that threatened limits to their yuan lending on the mainland will not be imposed, according to HSBC head of corporate banking Rose Lee. Ms Lee was speaking at the China Business Conference organised by the Hong Kong General Chamber of Commerce. 'There was some suggestions that bilateral domestic [mainland] funding lines should be limited to 40 per cent of total yuan assets,' Ms Lee said. Such a move would cap the amount of yuan lending foreign banks could undertake. Regulators had discussed the subject and some regulations had been drafted but they had not yet been made public. 'There has been some feedback [to regulators] from the foreign banking community and we haven't heard anything since.' News of the possible measure emerged in August, when the People's Bank of China (PBOC) was reported to have unveiled plans confirming foreign bankers' worst fears - that the PBOC may try to dodge World Trade Organisation agreements by using its power to limit foreign banks' access to the mainland market. Under a draft plan circulated to its provincial branches, the PBOC proposed capping the amount of yuan foreign banks could borrow on the local market - funding lifelines that are crucial as foreign operators are not yet able to freely tap the domestic yuan deposit market. Ms Lee said there was no certainty at this stage about the outcome of these proposals or what effect they might have on lending activity. 'The timetable [attached to the proposed cap] is that foreign banks will have until 2005 to comply.' She said the impact would depend on banks being able to build up domestic currency deposits.