Hong Kong banks told to improve their game when it comes to competing for China business
Hong Kong’s banks have been told to up their game when it comes to conducting China-related business as the industry undergoes a painful contraction driven by the mainland’s economic slowdown.
The calls come as leaders of Hong Kong’s banking industry have increasingly begun to realize that some of the city’s advantages as an international yuan hub are no longer valid amid an unprecedented year of flattening profits.
Ba Shusong, a former deputy director-general of the State Council Development Research Centre who currently serves as chief China economist at Hong Kong Exchanges & Clearing, criticised the city’s banking industry as lacking the ability to capture China-related opportunities.
He said local banks may be letting business opportunities slip away while they struggle with internal mechanisms to coordinate business – a charge he directed at both the subsidiaries of mainland banks and international players alike.
Products here are also largely monotone. I feel we must go and locate new advantages
Ba’s criticisms were underpinned by a widespread belief among banking leaders attending Tuesday’s Hong Kong Institute of Bankers’ annual conference that the city’s core competences in capturing yuan-related business are fading away. These lost competencies include Hong Kong’s early starter advantage in developing the yuan business, its large market share in consolidating offshore yuan liquidity and dim sum issuances, and the diversity in yuan-denominated products offered.
While these early advantages had meant a hot growth business as recently as 2014, Ba said it was now obsolete.
