20 July 2019

Qianhai cross-border RMB loan trade moves up a gear

Banks and brokerages in Shenzhen’s Qianhai new area are aggressively pushing to set up cross-border renminbi loan businesses after temporary management rules on the activity came out in January last year, China Business News reported Tuesday.

Cross-border renminbi loans are now made in two ways — either by Hong Kong banks issuing loans directly and taking the related risk, with mainland banks acting as settlement banks; or by Hong Kong banks issuing loans on their own, with mainland banks doing due diligence and taking charge of loan management as well as taking on risk by charging service fees.

At the launch of the Guangdong Qianhai Financial Technology Research Institute Monday, a representative from Ping An Bank (000001.CN) said cross-border renminbi lending is the only financial business that has been clearly defined in the area, giving financial firms registered there a major advantage.

According to a white paper on prospects for Qianhai’s financial development, a number of banks are now planning to set up offices in the area to become settlement banks for the business. Hong Kong’s Bank of East Asia Ltd. (00023.HK), Hang Seng Bank (00011.HK), Standard Chartered Plc. (02888.HK) as well as China Construction Bank Corp. (00939.HK, 601939.CN) and Industrial & Commercial Bank of China Ltd. (01398.HK, 601398.CN) are among those have already opened branches.

Lenders have applied to extend more than 15 billion yuan (US$2.41 billion) in loans, but only about 3 billion yuan has been issued, compared with the goal of 50 billion yuan set for this year, the report said, citing unidentified sources.

– Contact HKEJ at [email protected]



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