SHANGHAI: The growth of foreign banks' renminbi deposits and loans slowed in 2008 in contrast to the sharp increases at domestic banks, according to data from the People's Bank of China.

As of December, the outstanding renminbi and foreign currency loans of all financial institutions totaled 32.01 trillion yuan, up 17.95 percent from the year before, while total deposits in all currencies climbed 19.3 percent to reach 47.84 trillion yuan.

Renminbi deposits at foreign banks rose by only 30.18 billion yuan in 2008 compared to an increase of 55 billion yuan in 2007. In the fourth quarter of 2008, renminbi deposits at foreign banks fell by 2.27 billion yuan.

Foreign banks' renminbi lending rose by 26.08 billion yuan in 2008, down from an increase of 83.27 billion yuan in 2007. Lending in the fourth quarter dropped by 11.8 billion yuan in 2008.

Analysts attributed the slowdown in renminbi deposits and loans at foreign banks to the poor performance of foreign joint ventures and private sector enterprises, which accounted for the majority of the foreign banks' clientele.

"At a time when the economy is troubled by deepening uncertainties, many private enterprises have less money to keep in banks, resulting in the declining deposit growth rate," said Cai Rong, a banking industry analyst at China Everbright Securities Co in Shanghai.

The depressed exports and domestic demand have further dampened industrial output in the past several months, which in turn has prompted most enterprises to further reduce production and investment. As a result, their demand for bank loans has also shrunk.

Source:China Daily