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Thumbs-up to issue of yuan bonds by local foreign banks

SHANGHAI supports locally incorporated foreign banks to issue yuan-denominated bonds, according to a city guideline yesterday.

"We support locally incorporated foreign banks in Shanghai to issue yuan bonds to meet their long-term capital needs and Shanghai will launch a trial to allow overseas companies to issue yuan bonds," the guideline said.

The guideline was issued after the State Council, or China's Cabinet, decided to develop Shanghai into a major financial and shipping center by 2020.

Ling Tao, a senior official at the Shanghai headquarters of the People's Bank of China, said yesterday that several foreign banks have already shown interest to issue yuan bonds. But he declined to name them.

Seventeen locally incorporated overseas banks have started operations in Shanghai by the end of 2008, including HSBC, Citi, Standard Chartered, Bank of East Asia and DBS.

The assets of the 17 banks in Shanghai totaled 845.1 billion yuan (US$123.7 billion) by the end of 2008, contributing to 84.8 percent of the country's total.

Shanghai will also develop financial derivatives products despite the ongoing global financial crisis.

Yesterday's guideline mentioned derivatives including stock index futures, T-bond futures, foreign exchange futures, stock index options, interest rate options and gold exchange traded funds. But no timetable for their launch was given.

Shanghai Mayor Han Zheng said the city will focus on strengthening its financial market system, financial products innovation and open the market wider.

The city already is home to the country's major metal futures exchange, sole bourse for gold, diamond and foreign exchange and the country's biggest stock exchange.


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