OCBC, Bangkok Bank, First Abu Dhabi join Hong Kong’s US$14 billion offshore yuan scheme

Leading banks from Southeast Asia and the Middle East – including OCBC, Bangkok Bank, First Abu Dhabi Bank and Qatar National Bank – have joined the Hong Kong Monetary Authority’s (HKMA) expanded yuan liquidity facility, underscoring the city’s push as a global offshore renminbi (RMB) business hub.\nThe HKMA said on Monday it had doubled the quota it allocated to banks under the Renminbi Business Facility to 100 billion yuan (US$14 billion) from December 1, the maximum allowed under the scheme.\nThe number of lenders under the programme expanded to 40 from 25, with each receiving a quota according to their client base and demand, the HKMA said.\nThis marked the first time Middle East banks joined the scheme. First Abu Dhabi Bank is the largest bank in the United Arab Emirates.\n\nMore Southeast Asia lenders were also added, including the region’s second-largest lender, Oversea-Chinese Banking Corporation (OCBC) and its local arm OCBC Hong Kong, as well as Thailand’s largest lender Bangkok Bank.\nOther new participants include ING Bank, Taiwan’s Bank SinoPac, and Hong Kong-based Dah Sing Bank and CMB Wing Lung Bank.\n“With the support of the People’s Bank of China, the HKMA will continue to closely monitor the progress of the RMB Business Facility,” said Eddie Yue Wai-man, chief executive of the HKMA. Yue said more banks could be included depending on demand, “with the aim of promoting yuan use in the real economy and fostering offshore yuan growth in Hong Kong”.\nThe HKMA launched the trade finance liquidity facility in February, initially granting 50 billion yuan in quotas to 24 major lenders, including HSBC, Standard Chartered, BNP Paribas and Deutsche Bank, to provide stable yuan funding for trade finance.\nIn September, the HKMA said the facility was replaced by the RMB Business Facility, with the same quota but expanded scope. Enhancements introduced in October lowered funding costs to match those in Shanghai, while extending loan tenures to one year, in addition to options for one, three and six months.\n\nFrom December 1, the second stage of enhancements allowed banks to tap yuan funds for direct investment or general working capital for clients in Hong Kong or overseas. Yue said this was the most important upgrade, enabling yuan financing to support the real economy. The authority said the expansion enhanced “Hong Kong’s capacity in channelling offshore RMB funds to the global market”.\nHSBC, Standard Chartered and Bank of China (Hong Kong) – the city’s three note-issuing banks – separately said they had already used the facility under the new quota.\nHSBC said it provided a 1.4 billion yuan working capital loan to a subsidiary of a mainland China-listed company with overseas operations, marking one of the client’s first offshore yuan loans.\n“By participating in the RMB Business Facility, we offer greater flexibility in financing to support corporate clients’ growth and investment,” said Frank Fang, head of commercial banking for Hong Kong and Macau at HSBC, in a statement on Monday. “This enhanced scheme also strengthens the ability of banks in Hong Kong to support mainland China enterprises in their global expansion, playing to the city’s strength as a leading offshore RMB financing hub.”\nStandard Chartered said it had extended yuan loans to Sany Heavy Equipment International Holdings, jewellery retailer Lao Feng Xiang, and personal hygiene products maker Hengan International.\nBOCHK said it arranged loans for textile company Texhong International Group and developer Henderson Land Group, while parent Bank of China provided loans worth over 1 billion yuan each to overseas clients.\n