HSBC completes cross-border, two-way yuan lending in China

HSBC said recently that it had completed a two-way cross-border yuan lending transaction for a Taiwanese company under a pilot program China introduced in August, becoming the first foreign bank to conduct such a transaction.

The city of Kunshan, in Jiangsu province, got the go-ahead last month to allow cross-border, two-way yuan lending for Taiwanese companies, which enables them to utilise their onshore and offshore yuan funds more efficiently with better flexibility. It will also help companies optimize the allocation of yuan funds within a corporate group, reduce external borrowing, and improve returns on capital.

The deal was done for Kunshan President Enterprises Food Company Limited, a subsidiary of Uni-President Group.

HSBC said it had set up a master account and obtained a two-way lending quota totaling 1.49 billion yuan (HK$1.89 billion) for the company. The first transaction has been completed, with 10 million yuan transferred to this master account from its related overseas company.

The world's second-largest economy has stepped up efforts to open up its capital account recently with the aim of lifting the global status of the “redback” and finally making it on par with the US dollar.

- Reuters News