CAREERS IN HONG KONG banking are no longer confined to the metropolitan limits of one of the world's leading financial centres. The mainland is now the land of opportunity, and new recruits to the industry in Hong Kong had better be prepared to embrace it, according to Evan Chan, head of human resources at Dah Sing Banking Group. 'All eyes are now on China,' he said. 'The mainland is a very different place from what it was 20 years ago and everyone is now going there. There will be a lot of opportunities, and my advice to those making careers in this industry is to welcome them.' Until recently, China was out of bounds for most Hong Kong banks. As a market, it was more difficult to break into than Fort Knox, and banks hoping to get a foot in the door had to demonstrate assets of at least US$20 billion. That requirement allowed only the biggest - namely HSBC, Hang Seng Bank, the Bank of East Asia and Standard Chartered Bank - to set up shop. Even then, the scope of banking services they could offer was extremely limited. However, preferential treatment extended to Hong Kong under the Closer Economic Partnership Arrangement (Cepa) means that local banks now need assets of only US$6 billion to enter the mainland, while the requirement for overseas competitors remains as before. They will also be able to offer a full range of services, including general retail banking in yuan, as the sector gradually liberalises. The opening of this market is resulting in the biggest shake-up of Hong Kong's banking and finance industry in recent memory. The race is on in earnest for a slice of the mainland's retail banking sector, estimated at a staggering US$1.35 trillion. Capitalising on the relaxation of rules, second-tier Hong Kong banks have now started establishing footholds in the mainland. Both Dah Sing and Wing Lung recently received permission to upgrade representative offices and open their first fully fledged branches in Shenzhen, where they can tap into the market financing industry in the Pearl River Delta. Their representative offices in Guangzhou and Shanghai are next in line for upgrades to branch status. At the same time, China's economic boom and membership of the World Trade Organisation is encouraging established giants to spread their networks beyond the traditional centres of Beijing, Shanghai and Guangzhou. HSBC has just obtained approval from the China Banking Regulatory Commission to upgrade its representative offices in Chongqing and Chengdu, giving the bank its first branch presence in western China. Their mainland network now extends to 12 branches. 'China has arrived - that is a fact,' said Stuart T. Gulliver, HSBC's chief executive, corporate, investment banking and markets, at a recent conference. 'To paraphrase Napoleon, the sleeping giant is fully and comprehensively awake.' With its mainland headquarters in Shanghai, Standard Chartered has more than 400 staff in seven branches and one sub-branch. Six more representative offices in Chengdu, Dalian, Guangzhou, Hangzhou, Ningbo and Qingdao are on the way to becoming fully operational branches. Last year Dah Sing Banking Group was listed separately from Dah Sing Financial Holdings, with the potential for mainland expansion specifically in mind. With 45 branches and 1,400 staff in Hong Kong, Dah Sing acknowledges that the more than 100 competitors limit the opportunities for growth locally. China, on the other hand, is 'one of the biggest under-developed markets that all banks want to tap into,' Mr Chan said. 'Also, Cepa has had a significant impact on medium-sized banks like us, because it lowers the minimum assets requirement for opening branches in China. Bigger banks have had branches for some time, but the opportunity there is still huge.' The advantageous rules are a lifeline for Hong Kong banks struggling to increase profit locally as lending margins decline. Expanding into the mainland is therefore a welcome opportunity for growth. The only other growth options are through mergers and acquisitions and expanding the range of services, Mr Chan said. 'Banking is increasingly about scale,' he said. 'We have to offer a full range of services at competitive prices.' The pressure to do this has resulted in banks moving into sales of insurance and investment products. Mergers and acquisitions activity has also intensified as medium-sized local banks look to expand to meet China's asset requirements. An example is Wing Hang Bank, which started as a Guangzhou money changer in the 1930s, and now has 40 branches in Hong Kong and Macau, plus a new branch in Shenzhen. They merged with Chekiang First Bank last August to become Hong Kong's sixth-biggest lender by assets - and promptly bought a 5 per cent stake in Shanghai-based First Sino Bank. They expect to upgrade their Shanghai office to full branch status in the near future. HSBC, which already has a stake in Bank of Shanghai and Ping An Insurance, recently acquired 20 per cent of the Bank of Communications, China's fifth-biggest lender. Hang Seng Bank has a stake in Fujian-based Industrial Bank. Standard Chartered and the Bank of East Asia are also reportedly keen to clinch mainland deals. Martin Fish, Standard Chartered China's chief executive, has said they intend to 'gradually expand' until 2007 when China fully opens its financial market under WTO commitments. 'China is a key country in the bank's future, and we are fully committed to a continuous expansion of our business here,' he said. 'We have long-standing co-operative relationships with many Chinese banks. At the appropriate time, certain close relationships may be developed into strategic partnerships. This is our set goal.'