Yuan investment products have been hot over the past year as investors and depositors bet on the appreciation of the currency. White Collar's banker friends, however, are not as enthusiastic as they have yet to find a way of making them money-spinners.
From an investors' point of view, it makes sense to convert their Hong Kong dollar deposits to yuan as you can earn slightly higher deposit rates and also benefit from the gain in value.
For example, someone who converted HK$10,000 Hong Kong dollars into yuan in 2004 when Beijing first allowed local banks to open yuan accounts would now have HK$12,500. This explains why yuan deposits have grown to 510 billion yuan (HK$612 billion) by the end of April.
For corporate clients, it also makes sense. Companies that are trading with Chinese firms like to use the currency to settle their bills to prevent currency risks while those who accept the yuan earn from the gain in value against the US dollar.
Yuan trade settlement skyrocketed to 310 billion yuan in the first quarter, compared with 369 billion yuan for the whole of last year. China only started allowing companies to use yuan for trade settlements in July 2009 as part of its plan to internationalise the currency.
But bankers have told White Collar the key issue for them is whether they can really earn money from the yuan deposit pool.
Under restrictions imposed by the People's Bank of China, Hong Kong banks cannot lend yuan to individuals so no mortgage lending or margin financing on stock trading is allowed.