Citibank has applied to the regulator to incorporate its consumer banking business in Hong Kong, believing that local banks will soon be on the receiving end of more benefits from the mainland.
The US banking giant will inject its consumer banking business into an existing Hong Kong subsidiary of Citigroup.
Citibank's head of communications, Kathy Cheung, said the bank would inject billions of dollars into the entity to meet the capital requirements of the Hong Kong Monetary Authority. The process would take a year to complete, she said.
Citibank's decision follows Standard Chartered Bank's move to incorporate its business in Hong Kong in a bid to expand into China under the closer economic partnership arrangement (Cepa). However, Ms Cheung said Citibank's move was more related to its expansion plans in Hong Kong.
'Citibank believes it will be in a better position to compete in Hong Kong if we are incorporated here. This is because we believe China is going to give more benefits to Hong Kong incorporated banks, either through more new measures under Cepa or other arrangements,' she said.
Since February, Hong Kong banks have been permitted to conduct yuan business, enabling lenders to take advantage of eased travel restrictions for mainland visitors.