Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong has called on mainland authorities to drop asset requirement levels to make it easier for foreign banks, including Hong Kong operators, to enter the market. A minimum of US$20 billion in assets is required for foreign banks to set up on the mainland, a figure the authority believes is beyond the reach of most small banks. 'The US$20-billion hurdle, in the form of a minimum asset-size criterion for the establishment of a branch of a foreign bank in the mainland, is too high,' Mr Yam wrote yesterday in his weekly column, which appears on the HKMA Web site. He expected China would consider cutting the requirement in line with a global trend among regulators to either reduce or abolish it. Many overseas markets - including the United States, Germany and Australia - do not impose a minimum asset level, while Britain requires a low threshold of GBP1 million (about HK$11.25 million). Mr Yam's comments follow an announcement on Tuesday by the monetary authority that it was considering cutting its asset requirement level by more than 95 per cent - to HK$5 billion from US$16 billion . 'In banking, asset size is not necessarily a reliable measurement of quality,' he said. Technological developments meant that larger banks did not necessarily have an advantage, particularly if smaller banks could provide Internet-based services. Mr Yam said the suitability of a bank to a new market should be determined by factors such as capital adequacy ratio, asset quality, management team and the background of key shareholders. The authority wants its proposal to cut the asset requirement to set an example for the mainland to consider. He said it would be difficult to negotiate with the mainland to cut the threshold if the SAR continued to have a high requirement. Speaking at a function yesterday, Mr Yam confirmed the authority would next year cut expenses on its headcount by 5 per cent, meaning it would need to cut staff numbers by 30. He said a policy of not replacing departing staff would achieve the target without lay-offs.