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SCMP Reporter

ANTICIPATING a spillover of clients once new regulations squeeze out many foreign exchange firms, some banks are gearing up their margin-trading service.

  With the passage of the leveraged foreign exchange trading Bill in September and the cool response by forex-dealing firms to register by Saturday, banks, in particular, those from the Bank of China group are stepping up efforts to grab the customers of those squeezed-out firms.

  A Sin Hua Bank spokesman said the bank expected to see more forex customers using its margin-trading services.

  In the past few months, the bank has endeavoured to streamline internal processes to prepare for the increase in business.

  Customers with a minimum deposit of HK$50,000 can go into forex margin-trading at the bank, with a margin requirement of seven per cent.

  Apart from re-engineering its process, the bank has also designed new forex products to lure customers.

  'We are going to introduce a product called 'principal protected forex trading' to be launched by the end of the month for customers with a time deposit of HK$500,000 with the bank,' said the spokesman.

  The drive to cater to customers' forex needs came partly from the pressure to develop non-interest income for the bank.

  'Banks' interest income is being squeezed as the interest is on an upward trend, we want more fee-based revenue,' said Chan Yiu-fai, assistant general manager for Hua Chiao Commercial Bank, also a member of the Bank of China group.

  The bank will launch a promotion week in October at all branches, featuring various bank products, including margin-trading, that help customers manage their personal finance.

  Bank of America (Asia) will introduce forex margin-trading this month, wooing customers with deposit of US$50,000 or more.

  However, acknowledging the divergent customer profile of the bank and of the forex dealing firms, the bank will only target a portion of the left-out customer base.

  'We believe that we can cultivate a long-term relationship with some of those customers, especially those with a reasonable amount of idle cash,' said Samuel Tsien, director and executive vice-president of the bank.

  Other banks, such as Hang Seng Bank and Yien Yieh Commercial Bank, believe their targeted customers may not be those who used the service of forex trading firms. Therefore, the zest to grab the market is less compelling.

  Banks usually have a higher margin requirement, of seven to 10 per cent, than the trading firms and are more cautious in assessing the risk exposure in those transactions.

  Even so, banks are still beneficiaries of the new regulation as some have more hedging business with forex trading firms.

  'We find that in recent months, more forex firms contacted us and do hedging with us,' said Tang Joe Kwok, deputy general manager of Yien Yieh Commercial Bank.



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Foreign exchange market

Banks stepping up efforts to grab margin-trading clients