The Hong Kong Monetary Authority ( HKMA ) has allocated 100 billion yuan ( US$14.27 billion ) to an expanded list of 40 banks participating in the second phase of its renminbi business facility ( RBF), up from 50 billion yuan in the previous phase.

The scope of eligible renminbi ( RMB ) financing activities has also been broadened to cover RMB capital expenditure ( capex ) and working capital term loans.  Such enhancement has been well-received by the banking industry, HKMA says in a press statement.

Starting from Phase 2, which commenced on December 1, the 40 participating banks can apply for RMB funds from the HKMA within their assigned quota under the RBF, which they will use to provide to RMB financing to local and overseas corporates in support of the real economy.

The specific quota assigned to each of the 40 participating banks is based on the bank’s existing scale of relevant business, expected pipeline, as well as the geographical reach of its overseas intragroup banking entities, all of which reflect its potential in enhancing Hong Kong’s capacity in channelling offshore RMB funds to the global market. 

When determining the quota allocation, facility usage of the 24 banks that participated in the previous RMB trade financing liquidity facility and Phase 1 of the RBF has also been taken into account.

“With the support from the People’s Bank of China, the HKMA will continue to closely monitor the progress of the RBF, and will consider adding more participating banks as appropriate, subject to actual facility usage and market demand, with a view to further promoting the use of RMB in the real economy and fostering the growth of offshore RMB business in Hong Kong,” HKMA chief executive Eddie Yue says in the statement.

Hang Seng Bank, one of the participating lenders, says in a separate statement it has successfully executed the first RMB funding arrangement under the RBF, highlighting its commitment to promoting the international use of the RMB and fostering the continued growth of Hong Kong’s financial market.

According to Hang Seng, the RBF provides banks with greater flexibility in managing short-term funding, enabling them to provide RMB capital expenditure and working-capital term loans for corporate customers.

“Importantly, the facility offers a stable source of RMB funds – especially over the turn of the year – further strengthening Hong Kong’s position as a leading global offshore RMB business hub,” the bank adds.