Renminbi deposit rates will remain relatively high through the middle of the year amid increased arbitrage activities, the Hong Kong Economic Journal reported Monday, citing OCBC Wing Hang Bank Ltd.
The bank has seen a 3-5 percent increase in outflow from foreign currency deposits to renminbi savings as a result of arbitrage trading, the report said, citing chief executive Na Wu-beng.
It is leveraging its renminbi business with Singapore-based parent Oversea-Chinese Banking Corp. Ltd. to take advantage of the interest rate differential between the two markets.
The difference is as much 10 basis points, according to Oversea-Chinese Banking chief executive Samuel Tsien.
OCBC Wing Hang Bank accounts for half of the parent’s renminbi deposits of about 64 billion yuan (US$10.3 billion).
On Friday, renminbi time deposit rates in Hong Kong were 3.5 percent and 3.4 percent for one-month and three-month maturities, respectively.
That compares with Singapore’s 3.45 percent and 3.38 percent. Taiwan pays 4.1 percent and 4 percent.
The group has been helping depositors make some gains through interest rate arbitrage, Tsien said.
Singapore’s second largest bank acquired Hong Kong-based Wing Hang Bank last year, boosting the pre-tax profit contribution of the Greater China region to 12 percent from 6 percent.
By 2018, it expects the region to account for 20 percent of pre-tax profit, surpassing Malaysia which contributed 19 percent last year.
This article appeared in the Hong Kong Economic Journal on March 23.
Translation by Vey Wong
[Chinese version 中文版]
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