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UPDATE 1-Five Chinese banks to issue interbank CD to foreign institutions in Shanghai FTZ - sources
June 8, 2015 / 5:41 AM / 2 years ago

UPDATE 1-Five Chinese banks to issue interbank CD to foreign institutions in Shanghai FTZ - sources

(Adds details and context)

BEIJING/HONG KONG, June 8 (Reuters) - Five Chinese banks are set to issue interbank certificates of deposit to foreign financial institutions inside the Shanghai Free Trade Zone, the latest step of the city’s financial reforms, four sources with direct knowledge of the matter told Reuters.

Three of China’s “Big Four” state-owned lenders, China’s Industrial and Commercial Bank of China Ltd , China Construction Bank Corp and Bank of China Ltd (BOC) , as well as Shanghai Pudong Development Bank Co and Shanghai Huarui Bank will soon kick off the pilot programme, sources said.

BOC’s local branch will issue certificates of deposit worth 500 million yuan ($80.60 million) to 1 billion yuan, said a source.

The amount, though small, gives banks’ a new channel to complement liquidity and marks the latest of a series of steps Shanghai is taking to foster financial reforms.

“Banks themselves will decide the scale of issuance according to their liquidity,” said the source. “Such issuance in the free trade zone has relatively lower costs and can complement liquidity and help banks’ loan to deposit ratio.”

Officials at the five banks declined to immediately comment.

The Shanghai branch of the People’s Bank of China also declined to comment.

Last Thursday, Wang Zhenying, head of the survey and statistics department at the central bank’s Shanghai branch, said the issuance of certificates of deposit to foreign financial institutions has been approved and is awaiting the official launch. ($1 = 6.2036 Chinese yuan renminbi) (Reporting By Li Zheng in BEIJING and Zhao Hongmei in HONG KONG, Writing by Shu Zhang; Editing by Shri Navaratnam)

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