China says BEA, HSBC can issue yuan bonds in Hong Kong

BEIJING May 19 (Reuters) - China's cabinet has given approval to the Bank of East Asia (0023.HK) and HSBC Holdings (HSBA.L)(0005.HK) to issue yuan bonds in Hong Kong, the official Financial News reported on Tuesday.

The local Chinese incorporated units of the two banks would be the first banks to receive such approvals from the State Council, the newspaper quoted unnamed central bank officials as saying. The move would not only give HSBC, Europe's biggest bank, and the Bank of East Asia another source for yuan financing, it is also aimed at helping the development of Hong Kong as a financial centre and boosting investor confidence, said the paper.

Five Chinese banks, including Bank of China (3988.HK), China Construction Bank (0939.HK) and China Development Bank, have issued yuan bonds in Hong Kong since 2007.

($=6.83 yuan) (Reporting by Kirby Chien; Editing by Ken Wills)