HK residents rush for offshore bank accounts on China law worries

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Banks including HSBC, Standard Chartered and Citigroup have seen a spike in enquiries from Hong Kong residents about opening offshore accounts amid concerns stemming from China’s decision to impose a national security law on the city, five people said.

HSBC and Standard Chartered have each seen a 25-30% jump in enquiries, two of the people said. All five have direct knowledge about the rise in interest but did not want to be named as they were not authorized to speak to media.

The queries add to concerns about capital flight from the Asian financial hub, which has been roiled by pro-democracy protests in the past year, and underline worries about the liquidity of assets as the new law inflames Sino-U.S. tensions.

President Donald Trump has said he will strip Hong Kong of its special status under U.S. law if China moves ahead with the law that aims to curb sedition, secession, terrorism and foreign interference.

“What I’m worried about the most is I might not be able to freely exchange Hong Kong dollar anymore if the U.S. decided to sanction Hong Kong,” said 39-year-old May Chan, who recently asked HSBC about opening an offshore account.

The city’s de facto central bank has sought to allay concerns, saying it has all the means necessary to defend the Hong Kong dollar’s peg to the greenback.

None of the leading global retail banks with operations in the Chinese-ruled city have seen large outflow of deposits in the last two weeks, said two of the sources, noting it can take at least a month to open an offshore account.

But the rise in enquiries has been strong enough to slow banks’ response times, the sources said, adding places including Singapore, Britain, Sydney and Taiwan, are popular destinations.

Chan was told by HSBC she would have to wait a month just to get information about opening an offshore account.

She has already changed 70% of her savings into foreign currencies including U.S. dollar and British pound.

“If things get messy here I might not even be able to transfer my money out in the worst-case scenario, so it’s good to diversify risks.”

NO NOTICEABLE CAPITAL OUTFLOWS

While authorities insist the legislation will target only a small number of “troublemakers”, critics say it could erode the high degree of autonomy of the former British colony.

Many Hong Kong residents are renewing their British National Overseas passport, after the proposed new law prompted Britain to offer a potential refuge to the almost 3 million eligible for it.

“Now is the second wave of opening offshore accounts; the first wave was after June last year during the protests,” said one of the sources, referring to the sometimes violent unrest against a now-withdrawn bill that would have allowed people to be extradited to the mainland.

HSBC declined to comment on offshore account enquiries, but a spokeswoman said the bank “had not seen any signs of significant outflows.”

A Standard Chartered spokeswoman said there had been enquiries about offshore accounts, but it had “not seen any noticeable capital outflows”.

A Citigroup spokesman said the bank had seen a pick up in local account openings as Hong Kong lifted coronavirus-related curbs, but it had not seen capital outflows or a rise in offshore account openings. ($1 = 7.7499 Hong Kong dollars) (Editing by Jennifer Hughes and Himani Sarkar)

This article was originally posted on finance.yahoo.com/news/.

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