ICBC (Asia) has become another local bank to jump on the hot yuan-service bandwagon, giving Hong Kong residents the opportunity to open a yuan account on the mainland without setting foot across the border.

Announcing the new service yesterday, ICBC (Asia) Director Stanley Wong said that demand for yuan accounts and related services have been on the rise in the territory.

He said that by the end of February, yuan deposits by Hongkongers reached 47.8 billion yuan.

"The rise in yuan deposits is very rapid indeed," Wong said. "Yuan deposits have risen at a rate of 18 to 20 percent per month since the beginning of this year.

"Due to the volatility of capital markets and the weakening US dollar, some may see buying the yuan as a safe and attractive investment."

The negative interest rate in Hong Kong also adds fuel to the fire.

Aware of the rising demand, many local banks have already announced similar yuan services. Among them are Hang Seng Bank, HSBC, Bank of East Asia and Dah Sing Bank.

Since the yuan is not a freely convertible currency, there had been legal concerns that allowing Hong Kong residents to open a mainland account from the territory might violate regulations. The Hong Kong Monetary Authority subsequently made a clarification, saying it's fine.

Wong said the new service will adhere to all yuan regulations, which include the daily conversion cap of 20,000 yuan for Hong Kong residents.

"If a client wishes to withdraw money from their mainland account from Hong Kong, they can do it through a wire transfer," Wong said. "However, they are also subjected to the transfer limit."

The daily transfer limit from a mainland account to an overseas account under the same name is 80,000 yuan.

Asked whether it's possible that the new service will drain Hong Kong's deposits to its northern neighbor, Wong said the current hot demand for the yuan is not going to be a long-term trend.

"As the capital market changes and clears up, the demand for yuan deposits as an investment will slow down," Wong said.

He reiterated that the new service mainly caters to the increasing number of clients who work or have businesses in both Hong Kong and on the Mainland.

ICBC (Asia) will provide "Account Opening Witness" services in 16 branches in Hong Kong to set up yuan accounts in five designated ICBC branches on the mainland.

(HK Edition 04/23/2008 page2)