Mizuho Bank, Japan's third-largest bank by assets, has obtained the regulatory approval to issue the certificates of deposit (CD) in the pilot Shanghai free trade zone yesterday.
Japan's Nikkei newspaper said the bank plans to issue the first batch of CD between 100 million yuan ($15.3 million) and 200 million yuan after getting the nod from the China Banking Regulatory Commission.
Mizuho signed a loan agreement with Shanghai-based Baosteel Group on February 4. It is assumed the certificates will be used to raise funds for lending Baosteel.
A CD is a promissory note issued by a bank and bears a maturity date, a specified fixed interest rate and can be issued in any denomination. The term generally ranges from one month to five years.
A total of 102 institutions have been allowed to issue the certificates so far, including three foreign lenders. Analysts see it as a major tool for banks to boost the liquidity and a step towards rate liberalization.
