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China Eases Offshore Funding Limit for Foreign Banks

  • Rule applies to local and foreign banks with limited capital
  • Foreign banks have been plowing billions into China market
The People's Bank of China As China's Suppressed Market Rates Leave Room for Policy Tightening
Photographer: Qilai Shen/Bloomberg
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China’s central bank raised the limit on how much smaller lenders and foreign banks operating in the country can borrow offshore, a move that will ease a funding shortfall and give a push to expansion plans for firms such as HSBC Holdings Plc.

Their ability to borrow outside of China was expanded this week after the People’s Bank of China raised the leverage ratio for such funding to 2 from 0.8 for institutions with capital of less than 100 billion yuan ($15.6 billion), said people familiar with the decision, who asked not to be identified as the matter is private. Qualified banks will be given a 10 billion yuan initial quota, said the people.