Hong Kong banks will provide Renminbi services starting later February, the first time that banks outside of the Chinese mainland are permitted to deal in the currency.

Zhou Xiaochuan, governor of the People's Bank of China, said over the weekend that Hong Kong lenders will offer Renminbi-denominated deposit-taking and remittances from February 25.

"This is a necessary step for economic development and systemic progress," Zhou said on Saturday ahead of a central bank governors' conference organized by the Bank for International Settlements.

The central bank is offering BOC Hong Kong (Holdings) Ltd, which has been appointed as the clearing bank for Renminbi services in the special administrative region, a 0.99 percent commission for clearing Renminbi transactions.

BOC Hong Kong would charge a handling fee of around 0.125 percent, leaving 0.865 percent available as payment of interest to Hong Kong banks, said industry sources.

"Our bank is interested in offering renminbi services in Hong Kong," said Cecilia Ko, a spokeswoman of Hang Seng Bank.

"We'll launch RMB deposits, foreign exchange and remittance services once the clearing bank for Renminbi business in Hong Kong confirms the official launch date of these services."

Meanwhile, the Hong Kong Monetary Authority said recently that the SAR banks will issue Renminbi bank cards from March or April.

Currently, Hong Kong banks are negotiating with China UnionPay Co, the national bank card network operator in China's mainland, on relevant arrangement such as fees to participate in issuing Renminbi bank cards.

China UnionPay officials declined to make any comment before it finishes negotiations with Hong Kong card issuers.

The Renminbi accounts and cards services in the SAR will be offered only to Hong Kong residents.

(China Daily February 9, 2004)