Easier entry into the mainland banking market under the free-trade deal restricted to Hong Kong firms
Standard Chartered, Hong Kong's fourth-largest bank, will not benefit from dramatically relaxed entry requirements into the mainland banking sector under a free-trade pact designed to give Hong Kong firms a leg up over foreign rivals.
Under the closer economic partnership arrangement (Cepa), to take effect from January 1, a key requirement is that banks be incorporated in Hong Kong regardless of their country of origin.
Despite having a 150-year operating history in Hong Kong and being one of three note-issuing banks, Standard Chartered - which is incorporated in Britain - is barred from concessions allowing a lower asset requirement and relaxed profitability requirements on mainland operations.
Slashing the asset hurdle to market entry for Hong Kong banks from US$20 billion to US$6 billion exceeded industry expectations and was seen as directly benefiting medium-sized players.
Standard Chartered - which has eight mainland branches - played down the implications of the decision but executives privately told other bankers they were surprised at the requirement.
'Technically, we are not incorporated in Hong Kong, but we want to reinforce that we have been operating in China and Hong Kong for more than 150 years,' a Standard Chartered spokeswoman said yesterday.
