Credit Suisse’s demise has no major impact on Hong Kong SAR: Chief Executive
Published: Mar 21, 2023 05:42 PM Updated: Mar 21, 2023 05:38 PM
A view of Hong Kong Photo: VCG

A view of Hong Kong Photo: VCG

Citing Hong Kong’s resilient banking system, proper regulation and abundant liquidity, John Lee ka-chiu, Chief Executive of the Hong Kong Special Administrative Region (HKSAR) government, said on Tuesday that the Credit Suisse crisis is not affecting Hong Kong in a significant way.

“The banking system in Hong Kong is very resilient and it is very properly regulated,” Lee said at a press conference, responding to South China Morning Post’s question about the recent Credit Suisse turmoil.

“Credit Suisse’s businesses and assets in Hong Kong are relatively small, and the [Hong Kong branch of] Credit Suisse is in normal business and we are monitoring the situation,” Lee said, stressing that “the liquidity of the market is very abundant.”

“We have confidence that the situation is not affecting Hong Kong in a significant way, and we’ll continue to do our best to monitor the situation,” he said.

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) released a joint statement on Monday, noting that the exposures of the local banking sector to Credit Suisse are insignificant.

Credit Suisse’s operations in Hong Kong comprise a branch supervised by the HKMA and two licensed corporations supervised by the SFC, the statement said, noting that all of them opened for business on Monday as usual.

The total assets of Credit Suisse’s Hong Kong branch amounted to about HK$100 billion ($12.75 billion), representing less than 0.5 percent of the total assets of the Hong Kong banking sector, read the statement.

In addition, Credit Suisse’s licensed corporations are not among the top 10 active brokers in Hong Kong’s stock market and the derivatives market. As of the end of February 2023, Credit Suisse was the 9th largest listed structured product issuer, accounting for about 4 percent of the total market in terms of market value of outstanding units. Their overall exposures to the Hong Kong market are insignificant, HKMA and SFC noted.

In the meantime, Hong Kong’s total capital adequacy ratio of locally incorporated authorized institutions stood at 20.1 percent at the end of 2022, well above the international minimum requirement of 8 percent.

Hong Kong has been one of the financial centers of the world. According to a report conducted by the Hong Kong Trade Development Council (HKTDC) in October 2022, Hong Kong has one of the world's most active and liquid securities markets, and it is the largest offshore yuan clearing center. As of July 2022, 71 percent of global offshore yuan settlements are processed in Hong Kong, HKTDC said.

Global Times