Beijing has vowed its banks will not be tools of government policy, but big institutions are still called upon to prop up failing SOEs. Adoption of international accounting standards still appears a long way off. China banks, traditionally big players in Hong Kong and bit players in Asia, look towards international expansion. The handover of the territory to China did no harm to Hong Kong's banking industry. Profit growth rates peaked in June 1996, but even though the pace is slowing it remains highest in Asia.
Property is the driving force.
The new rules are prompting many to seek other revenue sources such as consumer lending and fee income as well as trade finance. But because of the Hong Kong dollar's peg to the greenback, a rate hike in the U.S. could reverberate here. The sector is the most open and competitive in the region. Except for HongkongBank, lenders have little exposure to ailing regional economies. Welcome to the 1990s Balance sheets are undergoing dramatic changes now that realistic lending guidelines are in place.