Banks are enjoying brisk business from a new deal that allows firms and individuals in the Suzhou Industrial Park (SIP) to conduct cross-border yuan transactions with Singapore.
HSBC Singapore said in a statement yesterday that it was among the first batch of banks to take part in the process. It lent a total of 150 million yuan (S$30 million) to two corporate clients within 30 minutes of the registration system opening on Thursday.
The two clients - a bus manufacturing enterprise and a distributor of allied industrial electronics - are registered with the SIP.
HSBC Singapore said it was able to secure the deals with the help of HSBC's Suzhou branch.
"This is the latest in a series of (yuan) initiatives which HSBC has been pleased to be involved with in our efforts to grow our range of (yuan) products and services," said HSBC Singapore chief executive Guy Harvey-Samuel.
"It... also helps to boost Singapore's development as a regional (yuan) clearing centre."
Standard Chartered Bank also announced that it has signed contracts with two clients worth a total of 39.5 million yuan.
One makes travel coaches and the other is in the electronic components manufacturing industry.
The China unit of local lender DBS Bank has also helped a South-east Asian customer based in SIP to obtain a yuan-denominated loan from the bank's Singapore headquarters. It did not state the quantum of the loan.
The banks are making the loans following the June 13 announcement by the People's Bank of China Nanjing branch that it will conduct outstanding balance management for SIP corporates that obtain yuan loans from Singapore.
Singapore banks will be allowed to issue loans to SIP entities, while SIP firms can issue bonds in Singapore, among other things.
The aim of the initiative is to strengthen financial cooperation between Singapore and China, as well as to facilitate the growth of the offshore yuan market here.
The Straits Times understands that the three banks are among a handful of lenders that have managed to issue loans under the scheme so far.
This article was first published on June 21, 2014.
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