Local bankers are demanding clarification of rules governing overseas banks' representative offices in Hong Kong after complaints some offices are running rings around existing guidelines.
According to Hong Kong Monetary Authority guidelines, representative offices should confine their business to 'representational and liaison activities'.
This includes 'marketing a bank's services to customers in Hong Kong and acting as a channel of communication'.
The guidelines prevent representative offices from 'engaging in banking business or in any financial activities of a type or nature that are normally transacted between a bank and its customers'.
Local banks have alleged several representative offices are soliciting overseas mortgage business while others are engaged in deposit-taking for head offices at home.
'Some have turned their representative offices into sales offices, faxing terms and conditions of their products to customers or financial advisers who solicit business on the offices' behalf,' one banker said.
'They seem to be testing the limit and pushing the boundary further and further out in terms of their promotions.' A recent example featured a British bank advertising its overseas mortgage services in a trade publication. Readers were advised to telephone the representative office which then provided all the product details and application forms.
