Forging Closer Collaboration in the Greater Bay Area Financial Sector

Free flow of capital is one of Hong Kong’s advantages in developing diverse offshore renminbi trading products and financial services. In the opinion of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) Strategic Team of Tai Fung Bank of Macao¹, Hong Kong has an advantage in driving Macao’s development of offshore renminbi services. By encouraging the capital flows between Hong Kong and Macao while promoting the development of their financial sectors, Hong Kong can also strengthen its role as a financial centre.

A Leading Bank in Macao

Sustainable Finance and Green Finance

The lower financing cost in Hong Kong may benefit the development of green finance and the Belt and Road Initiative (BRI). Tai Fung regards mainland China and Hong Kong as more advanced in the concept of green finance whereas Macao focuses more on environmental, social and governance (so-called ESG) concepts. With regard to green securities and bonds, Tai Fung predicts that more and more banking institutions will move in this direction. The services provided by Macao are already contributing to the development of BRI projects. At present, many companies are thinking of exporting to overseas markets, and they would like Hong Kong to provide them with more support. For example, the provision of more export credit insurance by Hong Kong organisations will help these companies to expand their export business in Hong Kong.

According to Tai Fung, Hong Kong could consider lowering the requirements for setting up corporate accounts in local banks to allow more companies to open bank accounts in Hong Kong, which would strengthen the role of Hong Kong as a financial centre for the GBA. Tai Fung also highlights the disparity in the requirements for setting up new accounts. The required documents for opening accounts in Hong Kong, Macao and mainland GBA cities are different, thus complicating the procedures. Tai Fung hopes that the related GBA institutions could consider unifying the documents required for opening new accounts.

Macao Financial Sector

Macao is studying the feasibility of setting up a securities exchange. As an initial public offering (IPO) in Hong Kong involves relatively stringent requirements that create hurdles for companies wanting to go public, the future Macao bourse may provide financing services to companies that meet certain basic requirements. In the light of this, the positioning of Macao’s securities exchange will be different from that of Hong Kong, and transactions are expected to be yuan-denominated in the initial stages. Since the listing conditions in mainland China are more stringent, the establishment of a Macao stock market will provide these companies with listing opportunities in the territory. However, the proposed Macao bourse will need to exercise caution in establishing its listing requirements and in vetting IPO candidates.

Like Hong Kong, Macao adopts a low tax rate policy, but its market is smaller with limited talent support. A preferred model will be for Macao to draw in talent and corporations from Hong Kong and become a corporate hub. In this way, the financial sector of Macao can bring in the experience and expertise to help it develop further.

Tai Fung finds that one of the issues to be tackled in the development of virtual banks is their positioning. In Hong Kong, virtual banks are generally operated by stakeholders of the local banking sector, which can substantially support their development, whereas Macao has been paying more attention to the development of electronic payments.

Challenges Facing GBA Operators

In the opinion of Tai Fung, GBA development raises questions about the availability of talent, the deployment of in-house personnel and the flow of capital. At present, related policy requirements of the three GBA regions of Guangdong, Hong Kong and Macao have yet to be unified. To take the Hong Kong-Zhuhai-Macao Bridge as an example, the requirements for vehicles crossing the Bridge and their licensing arrangements can be improved to enhance mobility between the GBA cities. City governments should agree on appropriate measures to improve mobility and encourage GBA development. In addition, GBA governments should simplify cross-border property purchases, financing loans and asset-based lending so that GBA residents can easily buy homes and move to other GBA cities.

¹ Members of Tai Fung Bank’s GBA Strategic Team are as follows: Si San Ho, General Manager of Risk Management Department; Ann Leong, General Manager of Legal and Compliance Department; Derek Hon, Deputy General Manager of Corporate Banking Department I; Ye Bin Bin, General Manager of Corporate Banking Department II; Pan Ying Zhang, Manager of Corporate Banking Department II; Marco Wong, Director of Personal Banking Department; Jose Hui, Director of Private Banking; Aileen Yang, General Manager of E-Finance Department, and Guo Chao, General Manager of Information Technology Department.

_{Company interview conducted by PricewaterhouseCoopers Advisory Services Limited}

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_{Note 2: This English version of the case study is translated by HKTDC based on the Traditional Chinese version prepared by PricewaterhouseCoopers Advisory Services Limited. Should there be any inconsistency or ambiguity between this English version and the Traditional Chinese version, the Traditional Chinese version shall prevail. PricewaterhouseCoopers Advisory Services Limited will not have or accept any liability, obligation or responsibility whatsoever for any loss, destruction or damage (including without limitation consequential loss, destruction or damage) however arising from or in respect of any use or misuse of or reliance on the English version of this case study.}​​​​​​​