The uptrend in interest rates on renminbi time deposits will continue in Hong Kong following the Chinese currency’s recent slide, according to a top executive of a local bank.
Margaret Leung Ko May-yee, deputy chairperson and managing director of Chong Hing Bank Ltd. (01111.HK), said funding cost for the Chinese currency has risen due to reduced supply in the market.
The renminbi’s recent devaluation has made people cautious about their exposure to the Chinese unit.
Leung said it is likely that the renminbi time deposit rate will surge to over three percent as the cost of capital has been increasing, according to the Hong Kong Economic Journal.
Citibank, DBS Bank and Standard Chartered Bank, among others, have revised up their renminbi deposit rates, with Citibank offering 5 percent annual interest on deposits of at least HK$100,000.
In other comments, Leung said Chong Hing Bank may consider opportunities for non-organic growth with the funds it is going to raise from a proposed rights issue.
The lender is also looking at expanding its mainland business.
Chong Hing Bank currently has a branch in Shantou, and two sub-branches in Foshan and Guangzhou. It has received approval to open a new sub-branch in Nansha.
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