Bank of Communications gets yuan-swaps OK
(Reuters)
Updated: 2005-09-28 15:13

Bank of Communications, China's fifth-largest lender, said on Wednesday it had won approval to offer currency swaps involving the yuan, part of a drive to help firms cope with new risk since a July revaluation.

The bank is only the second known to have been authorised to conduct the new business for institutional clients, after the Bank of China, the country's top foreign exchange lender, which gained the right in early September.

"The State Administration of Foreign Exchange granted approval for us to conduct the yuan's swap business as of Sept. 22," said the bank, which raised US$2.16 billion via an initial public offering in Hong Kong in June.

"That will enhance our product line, and enable us to offer effective exchange rate hedging services to our import and export clients," it said in a statement.

Beijing, after abolishing a dollar-peg and revaluing the yuan by 2.1 percent on July 21, said last month that banks would henceforth be allowed to trade yuan forwards and swaps with each other in the interbank market.

But each bank still needed approval from the foreign exchange regulator before launching such business.

Regulators have so far granted approval to 43 domestic banks or foreign bank branches to conduct onshore foreign exchange forwards trade in the yuan.

They include branches of Dutch lender ABN Amro , Bank of America Corp. , Citigroup Inc. , HSBC Holdings Plc. and Standard Chartered .