HSBC Holdings Plc plans to use the funds raised from selling the first yuan-denominated bonds in Singapore yesterday to increase the bank's yuan lending.

UK-based Standard Chartered Plc is set to follow HSBC's lead as yuan clearing became available in the city-state through the Industrial and Commercial Bank of China Ltd's Singapore branch which began the service yesterday.

HSBC issued 500 million yuan (US$81.3 million) two-year fixed rate notes at a yield of 2.25 percent through its Singapore branch, the bank said in a statement yesterday.

The money raised from bond sales will be used to grow the bank's yuan lending, said Matthew Cannon, head of global markets at HSBC Singapore, in a statement.

"This issuance will help open the market to other issuers looking to fund themselves internationally in yuan, offer new investment opportunities to the substantial pool of wealth managed in Singapore and assist in funding the rapidly growing yuan- denominated trade business in Asia," Cannon said.

Meanwhile Standard Chartered said it has started the issuance process for selling yuan-denominated senior unsecured debt in Singapore. The UK bank is marketing three-year notes at an annual yield between 2.75 percent and 2.875 percent, citing unidentified sources familiar with the issue.

Ray Ferguson, chief executive of Standard Chartered Bank Singapore, said in a statement that the move is to support Singapore as an international financial hub and as a center for offshore yuan. It also reinforces the bank's commitment to develop the yuan market.

Singapore's DBS Group Holdings Ltd is also looking to issue yuan bonds in the city-state, the bank said last week.

Singapore is the third offshore hub for Dim Sum note sales after Hong Kong and Taiwan.