A total of 15 banks in Hong Kong agreed Monday to provide cross-border loans totaling about 2 billion yuan ($321 million) to companies in Shenzhen's financial hub Qianhai Bay economic zone, marking a remarkable step forward for the internationalization of the renminbi.
Lenders including Bank of China, HSBC Holdings and Standard Chartered Bank will offer loans for 26 projects in Qianhai, according to a signing ceremony held in Shenzhen between the banks and Qianhai-based companies.
The loans will be used to support the construction and development of the Qianhai area. Tenors and interest rates of the loans will be set based on negotiations between the banks and borrowers, according to a regulation published by the Bank of China's Shenzhen branch on January 7.
Banks hailed the move as a milestone for the development of the offshore yuan market.
"The new scheme will create more ways for renminbi to flow back to the mainland, and accelerate the yuan's two-way flows between the mainland and Hong Kong," Standard Chartered said in a statement sent to the Global Times Monday.
"It also signals the further opening of the mainland's capital accounts. We hope there will be more breakthroughs in the yuan's globalization in 2013," the bank said.
Bank of China Hong Kong also said in a statement Monday that the new scheme will facilitate the development of the cross-border yuan business.
As of December 2012, outstanding yuan loans from financial institutions in Hong Kong were 79 billion yuan, while renminbi deposits in Hong Kong amounted to 603 billion yuan, according to the latest data from the Hong Kong Monetary Authority.