Increased two-way immigration - Hongkong residents moving to Australia in search of passports and security after 1997, and Australians leaving their recession-hit home to work in Hongkong - has meant that many of ANZ's traditional customers have been lured elsewhere for personal banking services.

In the era of ''relationship banking'' - trying to offer each customer a whole range of banking products - such a breach in services could be damaging.

''Most banks do not provide an adequate cross-border service to their customers,'' said one Hongkong retail banking consultant.

''Providing a seamless service can be surprisingly difficult for a variety of reasons. The fact that different profit centres in different countries often have different priorities, apart from a customer's cross-border needs, is often a main one,'' said the retail expert.

''To work this out successfully can provide a definite marketing advantage.'' While Mr Girvan said the attractions of owning a larger retail network in Hongkong were ''strong'', the hurdles involved in moving beyond the in-house branch level, combined with more pressing priorities in the bank's regional expansion move, meant ANZ was unlikely to pursue a larger retail presence.

Government policy prevents full-licence banks set up in Hongkong since 1978 from opening retail branches at more than one location, so the acquisition of existing networks is the only avenue for expansion.

While ANZ will not join the list of suitors for banks on the auction block, such as Overseas Trust Bank, Security Pacific Asian Bank or a host of small local operations, Mr Girvan said it had plenty of work in its new business realm.

''There are 15,000 Australians in Hongkong now and 215 Australian companies. The New Zealand community is growing as well. If we can make inroads with this group we'll be happy in the short term,'' said Mr Girvan, who has headed the local operation for two years.

''The still large number of families seeking to emigrate to Australia and the Hongkong families of those who have already gone are also part of our immediate target market.'' ANZ will not be offering credit card services or automated teller machine access to its account holders right away (negotiations are proceeding on both fronts) but multi-currency savings accounts, Hongkong dollar cheque accounts, travellers' cheques, and finance for residential property in Australia and New Zealand will form the backbone of new services offered.

Mr Girvan expects personal banking to work closely with ANZ's growing private banking group. In fact, the new office should pick up customers who cannot meet private banking's $500,000 minimum deposit requirements.

''Unfortunately, we had to turn away a lot of potentially good customers from private banking. We will still have limits in personal banking [$25,000 for statement savings, $100,000 for cheque accounts] but they're much lower. We should be able to service a whole new range of clients,'' said Mr Girvan, who plans a low-key initial marketing push.

ANZ seconded a retail banking officer from home office to launch the new business as few Hongkong staff had worked on the customer side of retail banking for several years.

The Hongkong operation, which employs about 140 staff, concentrates on trade finance, treasury operations and, increasingly, commercial lending.

Apart from a strong presence in the South Pacific and the Indian sub-continent through its takeover of Grindlay's bank in the mid-1980s, ANZ now has seven full branches scattered throughout Asia, including a new operation in Hanoi.

It has five representative offices in the region, including Beijing, which it hopes can lead to a full-banking licence in at least one of China's big cities.

In 1992, ANZ declared a A$579 million (HK$3 billion) net loss. In the same balance sheet it made a $1.9 billion provision for doubtful debts, the unwelcome legacy of the collapse of some of the high-flying Australian entrepreneurs of the 1980s and the ravages of Australia's deepest recession since the 1930s.

ANZ's international operations earned a profit of $161 million, which represents about 13 per cent of group operating profit.

That was not enough to rescue overall earnings, but ANZ expects growth in its commercial and personal banking efforts in Asia to make a much larger contribution in the future.