Hong Kong Financial Center, Licensed Banks, Deposit Taking

by Elliot Clark on January 5, 2009

Currently sixty of world’s hundred largest banks operate in Hong Kong making it one of the world’s largest offshore banking centers. Strong banking system, exchange rate stability through currency board regime and liberal economic model makes Hong Kong one of the most attractive investment destinations. Hong Kong represents a secure place for keeping savings. It is also attractive in terms of taxation, however does not provide high degree of bank secrecy that is offered by other offshore banking centers.

In 2005 there were 133 licensed banks, 39 restricted license banks and 35 deposit-taking companies in Hong Kong. From Offshore Banking Account207 authorized institutions 182 were foreign owned. In addition, there were 84 representative offices of foreign banks.

Hong Kong’s 5 biggest banks according to their assets:

– Hong Kong & Shanghai Banking Corporation (HSBC)
– Bank of China (Hong Kong)
– Hang Seng Bank Ltd
– Standard Chartered Bank (Hong Kong Branch)
– Bank of East Asia Ltd

Hong Kong as an offshore banking center operates in a specific way. Hong Kong has 3-tier banking system that includes licensed banks; restricted license banks (RLBs) and deposit-taking companies (DTCs). They are often referred as Authorized Institutions (AIs).

Licensed Banks: they can accept deposits of any size and maturity. They are also allowed to provide current and savings accounts to their clients;

Restricted License Banks (RLBs): they are allowed to accept deposits of HK$500,000 and above;

Deposit-Taking Companies (DTCs): they are licensed to accept deposits of HK$100,000 and above with the minimum maturity of 3 months;

The three-tier banking system allows Hong Kong authorities to keep domestic and offshore banking sectors separate from each other. Foreign banks that are not qualified for a full bank license usually get RLB or DTC license that allows them to conduct wholesale and investment banking business on Asian Dollar Market.

The Banking Ordinance was adopted in 1986 and since then has been subject to numerous changes and amendments in order to further develop banking supervision and align with modifying regulatory framework. Since April 1993 the Office of the Commissioner of Banking was merged with the Office of the Exchange Fund to create Hong Kong Monetary Authority (HKMA). Since then banking supervision that used to be one of the functions of the Office of the Commissioner of Banking was transferred to HKMA. Under 1995 amendment to Banking Ordinance HKMA is authorizes, suspends and revokes all three types of Authorized Institutions (AI). In addition, under amendment 0g 1997 HKMA also got function of regulating multi-purpose stored value card issuers and money brokers.

The Capital Accord adopted by Basel Committee is in force in Hong Kong since 1989. For Hong Kong as a international offshore banking center it is absolutely necessary to ensure that domestic supervisory framework fully corresponds to internationally recognized standards and especially those adopted by Basel Committee.

{ 4 comments… read them below or add one }

ari sallinen September 14, 2010 at 12:24 pm

please contact me about the opening of an offshore account.

Thank you,

Ari Sallinen

chandan karki January 12, 2011 at 3:08 am

Dear Team,

Greetings from Siddhartha Bank Limited, Nepal.

On behalf of our bank we need to know about the process and details regarding the offshore account in major banks(offshore business Units) located in Hongkong.

Please send me a mail providing all the details like minimum balance, maturity and all

Hope to receive your mail.

Regards,

Chandan Karki
Siddhartha Bank Limited
Treasury Department
Nepal

gilsaints88 March 31, 2012 at 4:34 pm

Hi Ari, do you know the miminum deposit to open an offshore bank account in hongkong? I’m from the Philippines and I need to open an account in Hongkong so that I can apply for a Google Merchant account. Thank you.

Joseph July 15, 2012 at 6:18 pm

Dear Ari,

I need a offshore account for new offshore company
name Luminous International Hodling company

Kindly quote me

Well appreciated your guidance accordingly

Regards,Joseph P. Aguilar

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