A look at Hong Kong’s banking industry
The
Hong Kong banking industry is one of the key components of the city’s financial system. Hong Kong is known to be Asia’s leading financial center and a
large concentration of banks can be found here. More than half of the most
important financial institutions have
opened branches in Hong Kong.
The banking system allows for three types of financial institutions:
- licensed banks;
- restricted license banks;
- deposit-taking companies.
The Banking Ordinance stipulates the manner in which these banking institutions operate and the deposit business they may conduct. Licensed banks are the only ones that can accept deposits from the public, regardless of their size and maturity term.
Restricted license banks can only take public deposits of at least 500,000 HK$ while deposit-taking companies can accept those of at least 100,000 HK$ with a maturity term of at least three months.
Service providers in the Hong Kong banking sector
Institutions that do not qualify for a full
banking license can apply for the restricted type. This system allows for the existence of a larger number of
banking institutions and service providers.
Investors in Hong Kong can enter the deposit-taking sector and register a company that will provide various services as well as conduct
investment banking activities.
Companies operating in the
banking sector will need to comply with the requirements expressed in the Banking Ordinance, have a certain amount of liquidity and capital at all times and submit returns to the
Hong Kong Monetary Authority.
The financial market in Hong Kong
The largest number of
banking service providers in Hong Kong are
licensed banks. The city also has a large
Stock Market, one of the top three stock markets in Asia. The city’s financial regulatory system is modern and allows for a high degree of transparency and supervision: two key elements that have contributed to the quality of the market. Hong Kong is also an offshore Renminbi center.
Investors who want to provide
banking services and open one of the
three types of banks available in the city must also pay attention to other related fields like
risk management,
non-performing loans,
cyber security and the rapid development of
FinTech or financial technology, the applications or products developed for the
financial services industry.