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INVESTMENT BANKING | Staff Reporter, Hong Kong

BEA shows its appetite for dim sum bonds

Bank of East Asia Ltd, Hong Kong’s largest independent local bank and third largest bank, expects to issue up to one billion in dim sum bonds this year.

Deputy Chief Executive Brian Li said BEA has secured approval from Chinese regulators to issue the dim sum bonds in Hong Kong.

Dim sum bonds are bonds issued in Hong Kong that are denominated in Chinese yuan or renminbi instead of the Hong Kong dollar. Until July 2010, only Chinese and Hong Kong banks could issue renminbi-denominated bonds.

Deregulation, however, led to the development of an offshore market in renminbi and the internationalization of dim sum bonds.

Li also expects China's recent cut in the reserve requirement ratio for banks to boost lending for BEA's subsidiary in China.

The People's Bank of China will cut banks' reserve requirement ratio by 0.5 percentage point effective Feb. 24 to boost liquidity and prop up the faltering Chinese economy.

Li did not exclude the possibility of raising funds in the near future while saying BEA's capital adequacy ratio is not too low.

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