“What banks do you recommend in Hong Kong?”
HSBC Group is clearly dominant in Hong Kong. HSBC (HongKong and Shanghai Banking Corp) is the biggest player in the market, and Hang Seng Bank, majority owned by HSBC, is the second largest. For commercial banking for your small offshore company, or a simple personal savings type account, you will likely end up at one of these two banks. If you prefer to be with a smaller, private bank with less international exposure, read on below.
There are other large commercial banks in Hong Kong, such as Bank of China, DBS and Standard Chartered. In our experience, they are a lot less willing than HSBC to open accounts for non-residents of HK. Why? You would think these banks would be hungry for business, right? There’s a simple reason, an unwritten rule that explains this. You have to look at it from the banks’ point of view. There is just so much money flowing out of China into these banks right now that they literally have more money than they know what to do with. With their traditionally conservative lending policies they cannot lend all these deposits out in the relatively small local market. Interest rates on the international markets are miserly, not to mention the counterparty risk of dealing with big western banks, something Asian bankers are acutely aware of. If you already had too much money to manage, and lots of pressure to generate high returns without risking it, would you want to the additional hassle of managing lots of small deposit accounts from westerners that you can’t really make money on anyhow? HSBC does not have this problem as they can shift excess liquidity within the group. Local HK banks cannot.
“How does offshore banking in Hong Kong differ from the rest of the world?”
If you’re accustomed to private banking in Europe (Switzerland for example), you’ll know that most banks don’t like to see too much activity on the account. Transactions in and out are generally discouraged, through the use of high fees and explicit warnings from private bankers! They want money to come in and stay in, and be managed by the bank, preferably on a discretionary basis with high fees.
In Asia it’s the opposite. Hong Kong banks, perhaps because of the city-state’s long history as a trading outpost, is different. HSBC in Hong Kong, for example, is not really interested in opening personal savings accounts for non-residents. When opening corporate accounts they want to see a connection with Asia and they want to see evidence of a real, active business. The benefit is that their transaction fees on wire transfers are much lower than in Switzerland, so for active business this is ideal.
“What if I don’t want to use HSBC?”
Many of our clients are looking for diversification and they want to avoid the kind of international money-market exposure that big international banks have. The solution would logically be to look for smaller private banks. However, there are no home-grown Hong Kong private banking institutions. You are then left dealing with the branches of European or Asian banks. This is is a far from ideal situation in my view, because:
- You are getting the international exposure you are trying to avoid anyway – you are probably looking at HK banks as a way of avoiding European exposure
- The minimum opening deposits at these banks are hefty, in the range of $1 million to $5 million USD
- Private banks don’t typically accept US citizens as clients, even though the HK commercial banks still do
- If the above three points are not a problem for you, then you still typically need a referral from the head office. These are not banks you can walk into cold off the street.
I would say if you are looking to open an account at a smaller private bank in Asia, Singapore might be a better choice for you. There you will find sophisticated home-grown private banking operations like Bank of Singapore and DBS Private Banking. Needless to say, Q Wealth can recommend paid up members free of charge to experts in both jurisdictions who can help you with your international banking requirements. “Can I open an account without going to Hong Kong?” This is a question we get asked all the time. I already covered it in more depth the original Q Wealth article. Suffice to say the answer is yes, but don’t expect it to be easy going. If you can get to Hong Kong in person, that is recommended. If you have your heart set on a Hong Kong bank account but cannot go there, our local facilitators can assist you. They will do an interview with you by Skype, then on the basis of that they will produce a written business plan, and present your application to the Hong Kong bank along with notarized corporate documents. The process can take some weeks when you do it this way.
“Can I open an account for my Nevis/Marshall Islands/Cook Islands company?”
Yes, absolutely, and this is my recommended way to go. Many local providers will try to encourage you to set up a Hong Kong company, but this is not recommended as the annual work and costs involved in compliance are not insignificant. For example, notwithstanding the fact that your income will remain tax free provided you have no HK business, you must still file annual audited accounts and tax returns. Using an offshore company adds a welcome extra level of privacy and asset protection at a relatively low cost, and Hong Kong banks are completely used to opening accounts for foreign or offshore corporations.
“Is there a minimum deposit to open a Corporate Bank Account in Hong Kong?”
There is, but it’s very little if you go for one of the commercial banks. A few thousand Hong Kong dollars should get you in.
“Are all accounts multi-currency?”
Yes, with a few minor exceptions, all Hong Kong bank accounts are multi-currency. This means you have just one account number, but when you log in to your internet banking, you’ll see separate balances for each currency. For example you might have some HK dollars, some Singapore dollars, some US dollars, some Euros etc. You can also hold Chinese Yuan Renminbi in your HK multi-currency bank account, and you can also hold virtual ounces of gold.
“Talking of Gold, can I buy Gold in Hong Kong?”
Yes, absolutely, Hong Kong is one of the best places in the world to buy and hold gold bullion coins. In fact, if that’s your main objective, you may not even need a bank account as there are also a number of private safe storage facilities in Hong Kong. We are happy to point readers in the right directions. ConclusionIf you are looking to increase exposure to Asia and decrease your exposure to the western markets, Hong Kong is a first class jurisdiction in which to open an offshore bank account. It is also be an ideal banking base for a trading company. The stability and rule of law is excellent. The only downside is the lack of choice of banks at the lower levels.