Renminbi deposit drop puts the squeeze on banks

Renminbi deposits have fallen to their lowest level since July 2011 in January, said the Hong Kong Monetary Authority. It is the second monthly drop for renminbi deposits.

Some Rmb800 billion in deposits flowed out of the banks in January. The result has been to squeeze loans from Hong Kong’s banks and coincides with more offshore renminbi (CNH) from Hong Kong. Putting further pressure on renminbi deposits has been the increased issuance of CNH certificates of deposits sold by Chinese banks.

Analysts said Chinese banks have been competing for offshore renminbi by issuing certificates of deposit with terms of up to a year, the yields or interest rates of which have increased dramatically over the past year.

Overall, total deposits grew 1% in January as Hong Kong dollar deposits improved slightly. The loan-to-deposit ratio was barely changed at 83.4% which is high for Hong Kong.

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