How to Open a Bank Account in Hong Kong

Hong Kong – an international business hub and a gateway to China for many foreign companies – continues to be an attractive destination among foreign investors.

This is particularly true as neighboring cities, such as Shenzhen continue to experience unprecedented growth in its economy, driven mostly by its expanding technology and innovation capabilities.

In 2017, the World Bank ranked Hong Kong the third best destination for ease of doing business.

Despite this ranking, however, Hong Kong has acquired a reputation for being a difficult place for foreign investors to open and maintain a bank account – due mostly to its arduous de-risking process.

Opening a bank account in Hong Kong is often a vital first step to establishing business presence in Hong Kong. It is therefore important for foreign investors to understand the procedures and documents required in order to be successful in doing so.

Banking in Hong Kong

In 2018 – 40 percent of the members of Hong Kong Institute of Chartered Secretaries believed it was more difficult to open a bank account in Hong Kong than in other jurisdictions such as mainland China, Dubai, India, Switzerland, Taiwan and UK.

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Further, over half of those surveyed believed the loss of business in Hong Kong was a direct outcome of the difficulties faced when opening a bank account.

Common issues faced relate to: producing required documents (59 percent), purchasing insurance or other financial products (33 percent) and conditions on maintaining fixed deposits (23 percent). For many banks, it is also not uncommon to impose a monthly charge for failing to maintain a balance above a certain minimum amount.

Others point out that the bank approval process is not transparent and that smaller-revenue generating customers are often met with higher procedural hurdles.

Among those who have reported facing the most problems when setting up an account are: start-ups, small-to-medium enterprises (SMEs), and foreign customers.

Step-by-step guide on setting up a bank account

Internal policies usually dictate the internal practices of a bank, meaning that the procedure and requirements can vary from bank to bank or even branch to branch.

However, generally the following procedure can be expected:

1. Most banks will require you to make an initial appointment (for example, HSBC – phone to general hotline; Bank of China – phone to the branch; DBS – email to bank manager for initial review).
2. Following this, a preliminary review is usually conducted (for example, HSBC – by phone interview with directors, Bank of China – meet with originals supporting documents; DBS – send supporting documents by email to bank manager).
3. If the preliminary review is passed, both parties will meet to sign the relevant bank application forms and documents, as well as paying the initial deposit.
   1. Deposit: differs according to the bank and is subject to change from time to time. For HSBC, at the time of publication, the initial deposit required to open the account is 10,000HKD—500 HKD of which is deducted for the service charge.
   2. Signatories: also differs according to the bank and time. While some banks accept certified and true copy of shareholders’ ID, others require the director/shareholder/ beneficial owner/ nominee to be physically present. In most cases, banks require the same number of people present as that forms quorum in a board meeting according to the Articles of Association to satisfy their Know Your Customer procedure.
4. At this stage, the bank manager will send the application for a department review which normally takes approximately one to two months. It is not uncommon for the review department to require further supporting documents before finally opening a new bank account on your behalf.

What are the documents required?

Again, while each bank may adopt their own individual policies, the documents that are generally required are as follows:

• Company documents: Business Registration Certificate; Certificate of Incorporation; Articles of Association; and NNC1 form.
• Proof of Business: documents required here are less clear, but generally include evidence of the nature of the business, experience in the industry etc. For example, issued/received invoices, business plan description, agreement with suppliers, bank reference letter and website.
• Personal documents: passport; and residency proof (e.g. utility bill, electricity bill or bank statement which are less than three months old and include your address and your name).

Gradual improvements to the banking environment

Gigi Wong, Manager of Business Advisory Services at Dezan Shira & Associates in Hong Kong, has had success in opening bank accounts for many of her clients.

Wong explains that “companies that have a physical office or employee located in Hong Kong usually have a much higher chance of success.”

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Corporate Establishment and Structuring

The Hong Kong Monetary Authority (HKMA) has recently announced that it has taken steps to improve its internal banking environment – taking the time to engage with various stakeholders to gather details of specific incidents relating to difficulties around bank account opening.

As a result, the HKMA has cautioned financial institution against a one-size-fits-all approach and encouraged them to take a risk-based approach that differentiates the “risk levels of individual customers in accordance with their backgrounds and circumstances.”

Wong observes that, “the situation is improving, but there is still a long way to go.”

Hong Kong needs to continue to ease its administrative red-tape in order to stay competitive with other international financial hubs in the region, such as Singapore – which like Hong Kong, serves as a financial gateway to Asia, but benefits from a more relaxed banking environment for foreign businesses.

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