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UPDATE 1-HSBC injects 2.8 bln yuan into China unit

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UPDATE 1-HSBC injects 2.8 bln yuan into China unit

Fri Nov 11, 2011 4:48am EST

By Kazunori Takada and Jason Subler

SHANGHAI Nov 11 (Reuters) - HSBC Holdings Plc has injected 2.8 billion yuan ($441 million) into its China unit, underscoring the growing importance of the Chinese market to the bank at a time when it is cutting jobs elsewhere.

The injection, which will bring the registered capital of locally incorporated unit HSBC Bank (China) Co Ltd to 10.8 billion yuan, marks the first time a foreign bank has been allowed to use yuan to inject new capital, HSBC's local unit said in a statement.

China has turned Hong Kong into an offshore centre for the yuan, or renminbi (RMB), a business HSBC has been deeply involved in, leading the league tables on handling issuance of so-called "dim sum" bonds.

"This is an important milestone for us because China is one of our first home markets," Peter Wong, Chief Executive of HSBC Asia Pacific, said in the statement.

"It's also a milestone in the internationalisation of the RMB, demonstrating the currency's readiness to be a medium for cross-border investment as well as trade," he said.

The capital injection into HSBC's China unit comes on the heels of its laying off several hundred investment bankers in London, Hong Kong and elsewhere as part of its jobs cull to save billions of dollars, as Reuters reported earlier this week.

Europe's biggest bank plans to axe 30,000 jobs by the end of 2013 under a revamp by Chief Executive Stuart Gulliver to cut annual costs by $3.5 billion. It has shed 5,000 to date, it said on Wednesday.

China has been taking steps to internationalise the yuan , starting with a programme for yuan trade settlement and now expanded to allowing certain business to be conducted in yuan in Hong Kong and other centres, including banks taking yuan deposits.

That has created a thriving market for companies selling yuan bonds, dubbed dim sum bonds, which some seek to use for their operations in mainland China, though such transfers require the permission of authorities in Beijing.

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