Bank On It
This is the column I have been struggling not to write for several months now on the basis that banks are such an easy target that it would be ungentlemanly to put the boot in along with everyone else.
But they have finally found my breaking point, and a quick survey of friends suggests this is now a common sentiment. A letter out of the blue tells me it has been decided for “administrative reasons” to terminate the lease on my safety deposit box. No explanation, no offer of alternative facilities, no regrets for a multi-year relationship being ended, just “get out”.
Nor is this an exceptional case. One client of a corporate service company has just had his Hong Kong account closed unilaterally by the bank on the grounds that as he has another account in his home country he doesn’t need this one. Another client was refused a corporate account for her new company even though she already has an account at the same branch for her existing company. No reason given. The mere mention of a US passport makes counter staff swoon.
One British friend had his wallet stolen while on holiday. On return to Hong Kong he naturally wanted to close his account so that the thief could not steal the money in it as well. He also needed to open a replacement one immediately and transfer the balance so as to pay office rent and staff salaries. The bank, in its infinite wisdom, decided it could indeed ensure no illicit withdrawals were made from the old account, but could only open the new account upon production of his identity card, which of course had been in the stolen wallet.
“But you saw my ID card when I opened the original account” “Yes, but now you want to open a new one so we need to see it again”. “I only have a temporary one from Immigration for the time being” “Come back next month when you have the permanent replacement one” “What about my UK passport” “If you are using a foreign passport for identification, we cannot open an account for you, we can only help those with a HK permanent ID card”
This last “reason” – if we can dignify it with such a title – gives a clue as to what is going on here. And it ought to be setting off alarm bells in my old department, Invest Hong Kong, especially among those given the task of attracting start-ups to our city. Established foreign companies that can show a multi-year history in their native land can just about open a bank account here for their new Hong Kong subsidiary. But woe betide the foreign entrepreneur just starting out. One was asked to show evidence of a turnover of $15 million per annum before he could open an account. How could he possibly grow a new business to that level without a bank account?
What is happening here is that the banks have panicked. Having been caught red hand facilitating money laundering and tax evasion all over the world and fined billions of dollars by regulators, they have over-reacted. But instead of using their brains and giving clear guidelines for staff to exercise discretion in a common sense way, they have adopted a “tick box” approach.
Unless this nonsense is corrected quickly, the consequences for our economy will be devastating. Is anyone listening?