Top bankers say Hong Kong’s wealthy are opening more offshore accounts to ensure they have an emergency escape route for their cash if the city’s civil unrest worsens.
So far, the money has largely been staying put, the heads of UBS Group AG, Credit Suisse Group AG and Standard Chartered Plc said in interviews at the New Economy Forum in Beijing. While Goldman Sachs Group Inc. isn’t seeing any change of behavior among major financial clients, “the situation needs to be resolved” soon, CEO David Solomon said.
The economy of the former British colony is reeling, with retailers, restaurants and hotels cutting wages or letting staff go to survive the downturn in tourism. Concern is mounting that prolonged tension will weaken the city’s financial industry – which accounts for about 20% of gross domestic product.
“We’ve seen clients open accounts in Singapore, Malaysia and Taiwan, in that order,” Standard Chartered CEO Bill Winters said in an interview. “But while the accounts were set up, not a lot of money has actually moved. We’re not seeing a crescendo.”
Similarly, Sergio Ermotti, the chief of UBS, said the Swiss bank has seen clients “activating contingency plans.”
“Geopolitical diversification by investors is nothing new,” Ermotti said.
People are taking a wait-and-see approach and Credit Suisse hasn’t seen big outflows or significant movement from clients, said CEO Tidjane Thiam. People started to open accounts a few months ago, according to DBS Group Holdings Ltd. CEO Piyush Gupta.
It has been hard to avoid the unrest with a number of bankers rattled by the escalating violence looking abroad for jobs. A Citigroup Inc. investment banker was detained by police last week, while a JPMorgan Chase & Co. employee was punched outside the company’s main Hong Kong offices. And tensions on the street have spilled into office interactions as well.
At Standard Charted the directive is clear, said Winters, “you leave your politics at home because we’re here to work.”
So far, no evidence suggests that Hong Kong risks losing its financial preeminence, according to Solomon.
“Hong Kong has always been very important as a financial center across the Asia-Pacific region,” he said. “I think China recognizes the importance of that. I think the rest of the world recognizes the importance of that. So I think it’s going to be important to find resolutions of that in the near term. Bloomberg