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Banking on a secure future

Published on Friday, 21 Sep 2012
Financial Secretary John Tsang urged banks to take full advantage of the irreversible trend of yuan liberalisation.
Photo: Jonathan Wong
Patrick Fung
Photo: Jonathan Wong
Eddie Yue
Photo: Jonathan Wong
Wu Xiaoling
Photo: Jonathan Wong
David Fung
Photo: Jonathan Wong

Amid the uncertain ebb and flow of the global financial environment, Hong Kong’s banking industry retains several important advantages, according to prominent industry professionals.

At the Hong Kong Institute of Bankers’ (HKIB) annual banking conference, held on September 13, a series of renowned speakers, including Hong Kong Financial Secretary John Tsang Chun-wah, highlighted a number of strategic areas where the banking industry could capitalise on key strengths.

Tsang said that while there appeared to be no end in sight for Europe’s financial difficulties, Hong Kong’s position as the mainland’s global offshore yuan hub presented the banking industry with attractive opportunities.

“Around the world, it is clear the liberalisation of the renminbi is an irreversible trend, so I encourage our banks to take full advantage of this unprecedented opportunity,” he said.

He added that with 700 billion yuan in deposits, Hong Kong holds the world’s largest pool of yuan liquidity outside of the mainland. “This provides the foundation for Hong Kong to build on its status as an offshore centre for yuan trade settlement, financing and asset-management services,” he said.

He also believes the recent offering of yuan deposits and investment services to customers outside Hong Kong could drive business growth.

Commenting on concerns surrounding Europe’s financial volatility, Tsang went on to say that while Hong Kong’s banking industry cannot afford to be complacent, compared to most European countries, it is more stable.

Over 500 Hong Kong participants from 110 organisations, and about 80 delegates from 14 mainland provinces, attended the event.

During a panel discussion on yuan business and new growth drivers, David Fung Kin-ming, Wing Hang Bank general manager, said the banking profession had to educate the public and its stakeholders on its value and take steps to rebuild trust in the industry.

With the 2013 planning session coming up for many financial institutions, Patrick Fung, HKIB executive committee chairman, said: “The conference was designed to provide delegates with insights to help them turn uncertainties into business opportunities and actionable ideas.”

Delegates heard how a stable outlook could signal optimistic news for employment in the financial sector. For example, plans to position Hong Kong as the premier private banking hub in Asia, and moves to attract fund-management institutions, could create positions for finance specialists.

As more customers embrace mobile and online banking facilities, talent is needed to staff the IT side of the financial industry. At the same time, new regulations, such as Basel 111, are helping to maintain a healthy demand for professionals to manage risk and compliance issues.

Under the banner of “The Year of Transformation – Heading into a New Era”, Eddie Yue, deputy chief executive at the Hong Kong Monetary Authority, explained how the regulator had recently revised its definition of who qualifies as a private banking client. Under the simplified definition, customers with US$1 million in assets under management, or total investable assets of US$3 million, can be considered private banking clients.

While a framework of regulations designed to protect private banking clients remain in place, Yue said the simplified regulation would allow private banks to comply with mandatory requirements while serving the needs of their clients more efficiently.

In her keynote presentation, Wu Xiaoling, vice-chairwoman of the financial and economic affairs committee of the National People’s Congress of the People’s Republic of China, told delegates that Hong Kong is in a strong position to further develop yuan financial tools.

She said it could assist mainland companies expanding abroad with their financial needs. “As mainland companies reach out to the world, Hong Kong can help to facilitate their funding requirements,” she said.

Without putting a timeframe on the full internationalisation of the yuan, Wu said Hong Kong’s banking industry could benefit from focusing on the current needs of the physical economy, such as trade settlement. Wu also said that with Hong Kong, London and Singapore providing offshore yuan services, the three jurisdictions complemented each other and promoted use of the yuan.

Meanwhile, a cross-section of banking customers surveyed in the HKIB annual banking survey “Are we serving customers the right way?” indicated they have confidence in the local banking sector. Out of a possible score of 10, respondents awarded 7.5 for general banking services, roughly the same score as last year. Still, respondents indicated there was room for improvement in product knowledge and advice among frontline banking staff.

“This could mean banks need to place more focus on training and upgrading skills,” said Winnie Yeung, managing director at Cimigo, a marketing and brand research consultancy, which carried out the survey.

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