Shanghai-based two banks viz. Bank of China, China's largest foreign exchange bank and Bank of Communications Ltd. have signed agreements with HSBC Holdings PLC in Hong Kong, which would assist them to settle cross-border trade in yuan.

In addition, the Bank of China also signed agreements with the Bank of China (Hong Kong) Ltd. and Standard Chartered PLC in Hong Kong.

On the other hand, Bank of Communications has signed an agreement with Hang Seng Bank Ltd.

Under the agreements the Hong Kong-based banks will be able to purchase or borrow yuan from the mainland banks.

Moreover, the BOC Shanghai branch has hit tentative deals with eleven overseas agent banks regarding yuan trade settlement.

The current move of the banks will facilitate many overseas enterprises as it would help enterprises shun exchange rates risks.