Local institutions will focus on corporates and wealthy clients when they move into the mainland, thereby reducing additional risk
RATINGS ANALYSTS SEE Hong Kong banks focusing on creditworthy corporates and higher net-worth individuals when they expand their operations on the mainland, which should limit any additional risk they take on.
'I don't believe they will have the appetite for building big networks to compete in the mass market with local banks,' according to Standard & Poor's Ryan Tsang.
Mr Tsang, director, corporate and infrastructure ratings (financial institutions), for S&P, says expansion plans will be closely monitored but he foresees little change to ratings emerging from the process at this stage.
'Actually, we believe Hong Kong bank fundamentals are good. But expanding into China will be challenging and involves quite a risk since there is a different corporate and credit culture. So yes, we will monitor the process closely.'
Fitch Ratings' associate director Kate Lin says her research into Hong Kong bank expansion plans on the mainland will be published later this month, but the early picture that is emerging from interviews with Hong Kong banks is one of aggressive expansion.
