Some of Wall Street’s biggest banks could potentially lose hundreds of millions of dollars in lucrative investment banking fees if China’s new rules on foreign listings force tech unicorns to list closer to home in Hong Kong, according to deal makers and analysts. A half-dozen American banks, including Citigroup, Goldman Sachs and JPMorgan Chase , as well as Swiss banking giants Credit Suisse and UBS, split more than US$350 million in fees as Chinese companies raised an eye-popping US$12.5 billion through initial public offerings in New York in the first half of this year, according to financial data provider Refinitiv. By comparison, these lenders enjoyed a much more modest cut of fees from IPOs in Hong Kong in the first half, with the league table dominated by the likes of mainland-backed players China International Capital Corp (CICC), Industrial and Commercial Bank of China (ICBC) and Futu Securities International, according to Refinitiv. While Morgan Stanley and Goldman Sachs were among the top five lenders in Hong Kong, their fees in Hong Kong were smaller than their US hauls. “If the mainland tech companies opt for coming to Hong Kong instead of the US for listing, US investment banks are set to face higher competition from their Hong Kong counterparts,” said Johnny Lam, deputy president of CPA Australia’s Greater China region, an accounting industry body. On Saturday, China’s top cybersecurity regulator unveiled draft rules under which it would review any foreign listings by technology platform companies that possess the data of at least 1 million users. That followed a series of data-security inquiries into several Chinese tech companies that recently went public in the US, including Didi Chuxing , the operator of China’s dominant ride-hailing app. Didi raised US$4.4 billion in June in the biggest offering by a Chinese company in the US since 2014. Heightened scrutiny of China’s tech unicorns has unnerved investors and caused a number of Chinese and Hong Kong companies to rethink a US listing, according to Tom Chan Pak-lam, chairman of the Hong Kong Institute of Securities Dealers. “At the end of the day, Hong Kong is part of China and the mainland regulators will feel more comfortable to let the data-sensitive companies list here,” he said. “These companies are likely to opt for hiring Hong Kong or mainland investment banks as they know how the Chinese regulations and procedures well.” Hong Kong logistics start-up Lalamove is reportedly considering moving its planned US$1 billion IPO to Hong Kong , while dozens more who have filed or were preparing to file for listings on American bourses may reconsider an American listing. Concerns about regulatory risk in China have wiped off about US$1 trillion in market value of US-listed Chinese tech stocks since mid-February, according to Kinger Lau, chief China equity strategist at Goldman Sachs in Hong Kong. Chinese listings in the US have been an important revenue stream for American banks in recent years, generating more than US$3 billion in fees since 2010 and nearly US$486 million in the first half of this year alone, according to Refinitiv. That was more than double the amount generated in the first half of 2020 and larger than the sum generated in all of 2019 and 2018. The top fee-generating banks in the first half from US listings by Chinese companies were Goldman Sachs, Morgan Stanley and Citigroup, pocketing nearly US$262 million in combined fees, according to Refinitiv. CICC and China Renaissance were the only mainland lenders in the top 10 for US listings by Chinese companies in the first half of the year. By comparison, only four American banks – Goldman, Morgan Stanley, BofA Securities and Citi – ranked in the top 10 for IPO listing fees in Hong Kong, where 96 per cent of IPO fundraising was by Chinese companies in the first six months of the year. They generated US$82 million in fees combined from Hong Kong IPOs in the first half, compared with US$131.54 million earned by six mainland-backed investment banks during the period. Banks contacted by the Post declined or did not respond to requests for comment. To be fair, American and other foreign lenders have been bulking up their teams in mainland China and in Hong Kong in hopes of attracting overseas listings of Chinese tech unicorns, which account for about two-thirds of the privately held start-ups valued at more than US$1 billion in Asia. However, China’s biggest banks are increasingly playing a larger role in IPOs by home-grown firms whether they list on the Shanghai Stock Exchange’s Nasdaq-style Star Market or in Hong Kong. To attract more tech giants and pre-revenue biotechnology firms to list, Hong Kong Exchanges and Clearing (HKEX) undertook a series of listing reforms in 2018. Last week, the operator of the city’s bourse added three Chinese finance heavyweights to a new advisory group as it seeks to attract more business from the mainland. And, underwriting fees on listings in Hong Kong are perceived as being less lucrative than similar offerings in New York. For example, 20 banks together received underwriting fees and commissions equivalent to about 1.9 per cent of the proceeds of Didi’s US$4.4 billion IPO in New York in June, with Goldman Sachs, Morgan Stanley and JPMorgan acting as the joint global coordinators on the listing, according to its prospectus . By comparison, nine banks – with Morgan Stanley, BofA Securities and China Renaissance acting as sponsors – split a 1.5 per cent underwriting commission on Kuaishou Technology’s US$6.2 billion in Hong Kong in February, according to a regulatory filing . It was the biggest debut globally this year. But some mainland firms may still list in the US because of more stringent listing rules in Hong Kong, according to Wang Hang, a partner at Baker McKenzie in Beijing. “The prospectus disclosure requirements are also different. The key is to evaluate whether the issuer can fulfil Hong Kong listing conditions. That is to say, not all of these companies are capable of shifting the listing to Hong Kong,” Wang said.