Royal Bank of Scotland's China incorporation is considering issuing yuan-backed bonds to raise capital, the bank said yesterday.

The Edinburgh-based bank has set up a team to study the plan.

China allows overseas banks' China incorporations to sell yuan-bonds in Hong Kong or Shanghai to help build up the yuan markets and the strength of the two cities as global financial centers.

HSBC China and Bank of East Asia China have both issued yuan bonds in Hong Kong. HSBC sold out the offerings to institutional investors on the first day while the Bank of East Asia used up its 4 billion yuan (US$586 million) quota after the bonds received a warm welcome from both institutional and retail banks.

Standard Chartered Bank has also shown interest in issuing yuan bonds.

RBS says it is waiting for more detailed directions from the central bank and had no timetable for the issuance.

It said it would focus on wholesale banking in China, including trade finance and cash management. The bank has already set up a team of 200-plus people in its wholesale banking sector in China. The bank, which sold its stake in the Bank of China, still has a cooperative relationship with the Chinese bank, RBS said.

(Shanghai Daily July 23, 2009)