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HKMA To Encourage More Foreign Banks To Locate In SAR

by Carla Johnson, Investors Offshore.com

13 December 2001


The Hong Kong Monetary Authority announced on Tuesday that it hopes to encourage more foreign banks to locate in the jurisdiction in order to cement the SAR's reputation as the regional financial hub.

In a consultation document released earlier this week, the HKMA revealed that the number of authorised institutions establishing operations in Hong Kong has fallen by 33% over the past six years. In the light of the Chinese mainland's recent accession to the World Trade Organisation, the authorities are clearly keen to ensure that Hong Kong is used as a gateway for mainland entry, and is not bypassed altogether.

To this end, the Monetary Association has announced that it intends to scrap the US$16 billion minimum asset requirement for foreign banks, bringing the amount needed down to HK$5 billion, in line with the requirements for local institutions. As well as encouraging foreign financial institutions to put down roots in the SAR, the authorities hope that this move will encourage the mainland to reduce its minimum asset requirements- currently set at US$16 billion- which would make it easier for Hong Kong banks to establish there.

'These proposals would further open up Hong Kong's banking sector to allow a broader range of domestic and international institutions to participate in the Hong Kong markets as full licence banks,' explained the Deputy Chief Executive of the HKMA, David Carse, adding: 'We believe these incentives will help to rationalise the authorisation and market entry system in Hong Kong and will also enhance the status of Hong Kong as an international financial centre.'


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