HSBC Holdings Plc and Standard Chartered Bank <2888.HK> said on Wednesday that they were preparing for yuan-denominated bond issuance in China to help the country develop its local-currency financial markets.

The two are the first foreign banks to announce plans to issue yuan bonds in China since the government last month said it would open up issuance to locally incorporated overseas lenders.

China last month also granted permission to HSBC and Bank of East Asia <0023.HK> to issue yuan bonds in Hong Kong.

Standard Chartered said it planned to raise up to 3.5 billion yuan ($512.5 million) selling bonds in China's interbank market.

HSBC gave no figure for its bond issuance plan and neither bank gave a time frame for the issues, which are subject to regulatory approval.

China is stepping up efforts to increase the international status of the yuan, or renminbi (RMB), and aims to develop Shanghai into a global financial center over the next decade, including allowing foreign companies to sell shares publicly in China.

Both banks said they were issuing the bonds to support the development of China's financial markets, stressing that they were already strongly capitalized and highly liquid.

By engaging in local RMB bond issuance, we hope to assist in elevating the RMB's status as an international reserve currency, Standard Chartered Group Chief Executive Peter Sands said in a statement.

Selling yuan bonds could also help to fund Standard Chartered's rapid expansion in China. The Asia-focused lender said its China business grew 80 percent annually on average over the past four years.

(US$1=6.832 Yuan)