HK banks on yuan
25/2/2004 16:50
Starting today, more than 40 Hong Kong banks are permitted to offer
deposit services in the Chinese yuan, or renminbi. The banks are setting higher
deposit rates to attract customers, eastday.com reported today.
The Bank of
China will be the clearing bank for the new services.
It is a significant
move for the Hong Kong financial industry, with a large amount of yuan able to
flow back to the Chinese mainland via an official channel, said an industry
analyst.
Large inflows of yuan to Hong Kong will test the business capacities
and handling abilities of Hong Kong banks, the analyst pointed out.
In order
to guarantee the successful operation of the business, starting on February 19,
the Shenzhen Customs performed tests on the services.
The Hong Kong banks,
engaging in the retail yuan business for the first time, raised their deposit
rates to attract customers: DBS Bank offered the highest monthly rate,0.78
percent; the lowest, 0.3 percent, was offered by the Liu Chong Hing Bank Limited
with most rates between 0.5-0.7 percent.
The differences between the deposit
rates indicate that the Hong Kong financial market is open and competitive, said
an expert with the Standard Chartered Bank Hong Kong Branch.
It will take at
least 18-24 months for Hong Kong banks to turn profits from the business, an
industry analyst predicted, adding that making profits is so difficult.
Wendy Zhang/ Shanghai Daily news
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