SEOUL, March 19 (Reuters) - South Korea’s central bank and financial regulator are inspecting the units of four foreign banks following a spike in yuan deposits, three sources with direct knowledge of the matter told Reuters on Wednesday.
One of the sources, who declined to be identified, said the Bank of Korea and the Financial Supervisory Service are inspecting branches of Bank of China Ltd., Industrial and Commercial Bank of China Ltd., China Construction Bank Corp. and Barclays PLC. The inspection is due to run until March 28.
Another source told Reuters that regulators were looking into a spike in yuan-denominated deposits as Chinese banks ramp up fundraising overseas in response to tighter credit conditions in China.
Regulators have been concerned about the rapid build-up, albeit from a low base, of yuan deposits in South Korea because of potential risks out foreign currency outflows. Foreign banks are allowed to raise yuan deposits in South Korea. (Reporting by Joyce Lee and Lee Shin-hyung; Writing by Se Young Lee; Editing by Choonsik Yoo and John Mair)