Hong Kong lenders are benefiting from mainland’s capital controls, says Bank of China HK chief
The mainland’s ever-stricter policies on capital outflow are boosting lending business in Hong Kong, according to the head of Bank of China Hong Kong (BOCHK).
Yue Yi, the bank’s chief executive, said at the annual general meeting on Wednesday that the lending sector of BOCHK’s business has already increased by about 10 per cent this year.
He put this down to the mainland’s clampdown on capital outflows. As investors struggle to move money out of China, they are turning to banks in Hong Kong for financing.
“The growth in the lending sector is very strong this year. The mainland has been tightening its policies on foreign exchange in order to stabilise the exchange rate and interest rate,” said Yue.
According to Yue, BOCHK handles about 15,000 yuan transactions every day, totalling some 0.8 trillion yuan, and the bank now nets about 10 per cent of its profit from services involving the Chinese currency.
We believe that the shrinkage of offshore yuan’s liquidity pool has bottomed. It is starting to bounce back
Yue added that as the yuan continues to appreciate, investors are gaining confidence in the currency, which is in turn spurring demand for offshore yuan loans.