HSBC and Citibank have cut interest rates for medium-term yuan deposits for retail consumers below the central bank benchmark.

The move highlights differing policies between local and foreign banks. While foreign banks have refrained from lending more, local banks have gone ahead to fund various projects related to the stimulus plan.

During the first quarter of the year, total new yuan lending by local banks amounted to RMB4.6 trillion in contrast to lending made by foreign banks which dropped by RMB26.4 billion during the same period.

Foreign banks tend to cater mostly to multinational corporations who because of the global economic crisis have been more cautious in expanding into China, thus the lowered financing demand. This results to a lesser need for foreign banks to keep deposits. Add that to the fact that bank profit margins in the country have also declined, banks then have even less motivation to keep deposits and more motivation to cut on costs.

HSBC cut interest rates for yuan deposits with maturities of two years to five years to between 1 percent and 1.2 percent. This is below the bank?s one-year deposit rate of 2.25 percent and also below the central-bank benchmark.

Citibank on the other hand, cut interest rates for two-year term deposits to 1 percent, and three-year term deposits to 1.1 percent. ?In the past, banks were afraid of losing market share if they lowered their deposit rates. But when the economy is slowing, there are fewer channels to lend money, so banks have less of a need for deposits,?Wang Qing, an economist at Morgan Stanley told The Wall Street Journal.

So far, local banks have kept deposit rates for retail customers in line with central-bank benchmarks. HSBC told the WSJ that the cuts were made following their business strategy given the current market situation while Citi declined to comment.

A Chinese investment group has bought minority stakes of a U.S. basketball franchise and its arena.

The group could purchase as much as 15 percent of Cavaliers Operating Co. although the deal is still pending approval from the National Basketball Association?s board of governors.

Team president Len Komoroski told the AP that the group met with Cavaliers principal owner Dan Gilbert about the partnership and called the business venture ?an exciting new opportunity.?

Mr. Gilbert will maintain his role in overseeing the organization and 20,000-seat arena. NBA has been open to international group ownership at a minority level as a way of marketing the game globally.

If the deal pushes through, the team?s center, LeBron James, could see his popularity overseas increase in the region. Mr. James is already considered one of the most famous NBA players in Asia. Last year, he won a gold medal playing for the U.S. team during the Beijing Olympics

China unveiled Saturday credit rating standards for the sovereignty entity of a central government, the first sovereign credit rating standards in China, aiming broader participation in global credit rating.

The standards were announced by Dagong Global Credit Rating Co Ltd, one of the first domestic rating agencies in China.

The sovereign credit rating standards would be able to evaluate the willingness and ability of a central government to repay its commercial financial debts as stipulated in contracts, said the company.

The rating results could reflect the relative possibility of a central government to default as a debtor, and the rating is based on the country’s overall credit value, according to Dagong.

Elements of credit risks will include the country’s political environment, economic power, fiscal status, foreign debt and liquidity, said the company, adding that it judges the credit of a sovereign entity on the basis of a comprehensive evaluation of its fiscal strength and foreign reserves.

Compared with other rating agencies, Dagong pays more attention to the different economic stage of each country, and examines the features of its credit risks in a systematic view, according to Dagong.

Jiang Yong, director of the Center for Economic Security Studies under the China Institutes of Contemporary International Relations, said the financial crisis exposed a risk of the international society relying solely on the credit rating institutions of a single country, which is the largest risk of the world economy.

Luo Ping, head of the training center under China Banking Regulatory Commission, said the launch of the sovereign credit rating standards would help improve the transparency of credit rating information, and would strengthen China’s position in the international financial arena