At face value, that was not a big step but the bank’s move encapsulates the main themes governing banks in the Special Administrative Region. Although profitable and still full of potential, the Hong Kong story is inseparable from the mainland China story. And the Chinese authorities, intent on maintaining Hong Kong as a showpiece, have made concessions that are helpful to the banks incorporated there.
Mainland banks are intent on upgrading their financial systems to world standards and foreign banks have a major role to play in this. Under the 2003 Closer Economic Partnership Agreement, Hong Kong banks receive a number of privileges to help them do business on the mainland, including having to hold fewer assets than other foreign banks.
